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UNIVERSITY 

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LIBRARY 


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PRINCIPLES 


OF    THE 


LAW  OF  ATTORNEY  AND  CLIENT 


A    MONOGRAPH    BY 

\V.  B.  HALE,  LL  B. 

Author  of   "Bailments  and  Carriers";   "Damages" 


St.  Paul,  Minn. 

WEST  PUBLISHING   CO. 

1896 


CoPYKicnT,  1S96, 
WEST  PUBLISHING  COMPANY. 


ATTORNEY  AND  CLIENT. 

1.  In  General— Definition. 

2.  Establishment  of  Relation. 

3-4.  General  Powers  of  an  Attorney. 

5.  Rights  and  Liabilities— Good  Faith  and  Fairness. 

6.  Duty  to  Account— Liability  for  Money  Received. 

7.  Liability  for  Negligence. 

8.  Liability  for  Breach  of  Contract— Exceeding  Authority. 

9.  Liability  to  Third   Persons. 

10.  Reimbursement  and  Indemnity. 

11.  Compensation. 

12.  Attorneys'   Liens. 

13.  Retaining   Lien. 

14.  Charging  Lien. 

15.  Confidential  Communications. 

16.  Termination. 


IN  GENERAL— DEFINITION. 

1.  An  attorney  at  law  is  an  ofB.cer  of  a  court  of  record  le- 
gally qualilied .  to  prosecute  and  defend  actions  in 
courts  of  IsL-w  on  the  retainer  of  clients.' 

The  relation  existing  between  an  attorney  and  his  client  is  that 
of  principal  and  agent.  The  client  is  the  principal;  the  attorney 
is  the  agent.  In  its  broadest  sense,  "an  attorney  is  one  that  is  set 
in  the  turn,  stead,  or  place  of  another" ;  ^  the  term  being  synonymous 
with  "agent."  Attorneys,  in  the  modern  use  of  the  term,  are  of 
two  sorts:  attorneys  at  law,  and  attorneys  in  fact.  An  attorney 
in  fact  is  a  private  attorney  authorized  by  another  to  act  in  his  place 
and  stead,  either  for  some  particular  purpose,  as  to  do  a  particular 
act,  or  for  the  transaction  of  business  in  general,  not  of  a  legal  char- 
acter."^ An  attorney  at  law  is  a  public  attorney  employed  by  a  party 
in  a  cause  to  manage  the  same  for  him  in  the  courts.     Attorneys 

1  Weeks,  Attys.  at  Law,  p.  14G.      2  Co.  Litt.  51o.        3  Black,  Law  Diet, 

ATTY.  &  CL. — 1 


2  ATTOHNKY    AND   CI.IKNT.  (§    1 

at  law  an-  ..iViccis  of  llir  courts  in  whidi  tlu'V  inacliic/  and  must 
jMissi'ss  rdiain  Ii-^al  «|ualiliiat i(»ns.  No  out-  not  possossiii^  these 
i|iialillralioiis  is  cMlillfil  to  coudui  t  au<ttin'r"s  cause  in  the  eonits.'' 
Attuiiu-vs  at  law.  tui 'account  of  thrir  itcculiar  kno\vlc(l;^('  and  skill, 
an-  fnM|iirntlv  miplovcd  in  the  trausactitui  of  business  not  involving- 
lili;.Mlioii.  such  as  dia\vin,u  contracts,  deeds,  wills,  etc.,  nianaj;lng 
|»i«»l»eri_v.  and  the  like.  Any  {terson  of  eoinjtetenl  skill,  however, 
al«lioii;;h  no!  an  atioiiiev  at  law.  may  tiansact  such  business.  In 
Ku;:land  i»eis<ins  »n;;aired  in  tin-  luacliee  of  law  are  divided  into 
several  classes,  under  the  names  of  attorneyfi,  solicitors,  proctors, 
(•onnselors.  barristers,  and  advocates.  Each  class  perforins  difier- 
ent  functions.  I-'or  (  xamiile,  att(»rneys  and  solicitors  prepare  the 
<-auses  foi-  trial,  but  cannot  try  them.  This  is  done  by  the  bar- 
risters. These  distinctions  do  not  pre\ail  in  the  I'nited  States.  At- 
torneys at  law  jterfoiiu  all  the  duties  and  have  all  the  powers  of  all 
classes  of  le^al  jirai  titioners  in  Knj;land.  For  convenience,  the  term 
"attorney"  will  be  used  as  meaninji^  attorneys  at  law  in  the  broad 
sense  heif  indicated. 

11'///'  Antlmrlzxl  to  Practice. 

"The  bar  is  no  unim]»ortant  part  of  the  court,  and  its  members 
ar«'  (dlicers  of  the  court,"  and  therefore  in  some  sense  olticers  of  the 
state  for  which  the  court  acts.®  Accordingly,  no  one  is  entitled  to 
pra<tice  in  the  courts  of  a  state  who  has  not  been  duly  admitted 
according  to  the  lex  fori.'  Aliens  and  nonresidents  cannot  be  ad- 
mitted." In  some  jurisdictions  women  are  entitled  to  j)ractice;  in 
«»thers.  they  are  not."  The  most  usual  requirement  for  admission 
is  that  the  apitlicant  shall  be  a  citizen  of  the  state  of  good  moral 

*  Tlioiiias  V.  SIcch',  'J'J  Wis.  L'oT;  In  lo  Mosupss.  3!)  Wis.  .">09;  Robinson's 
Case,   l.n    Mass.  3T(). 

8  Col.t)  v.  .IiKlKi*  of  Supcrif*!-  Court,  43  Mich.  281),  5  X.  W.  3U9. 
«  In  re  .Mo.sHfS.s,  :'.:»  Wis.  .">(H). 

•  Wiijiit.  Aii.  -,7,1;  U.)l)l)  V.  Smith,  3  Scam.  (111.)  4G;  State  v.  Garesche.  '^^ 
Mn.  ii.-.c,;  .McKojin  v.  iH'vrics,  3  Barb.  (N.  Y.)  190.  Circuit  jutlj^o  not  entitleil 
i<>  practicf.  IIul)by  v.  Smilli.  1  (Nnv.  (X.  Y.)  .^88;  Scyiiioiir  v.  Ellison,  2 
c.w.  (X.   V.I  i:'.. 

-  iti  It-  O'Nril.  9(1  .\.   Y.  .'S4:    In  re  Mosncs^,  3!)  Wis.  ."HH). 

^  In  n-  (5o(h1.-I1.  4S  Wis.  ti93;  In  ro  Hall.  .">()  Conn.  131;  In  re  Leonard.  12 
Or.  9.'',.  (i  I'ac.  42<;;  Kol)inson's  Cas(>,  1.31  Mass.  370.  And  see  note  to  In  re 
I.«'<.nurd.  ->:\  Aui.  Rep.  :',2.'.,  a  Vnc.  420. 


§    2)  *  ESTABLISHMENT    OF    RELATION.  3 

character,  iii>ward  of  21  years  of  age,  and  learned  in  tlie  law.      In 
other  respects,  the  general  principles  of  agency  apply. 


ESTABLISHMENT  OF  RELATION. 

2.  The  relation  of  attorney  and  client  may  be  established 
in  any  of  the  -ways  in  -which  any  other  relation  of 
agency  may  be  established.  The  act  of  a  client  by 
•which  he  engages  an  attorney  to  manage  his  cause 
is  called  "retainer." 

"It  is  said  that  two  things  are  necessary  to  establish  the  relation 
between  attorney  and  client:  (1)  The  agreement  of  the  attorney  to 
be  attorney  for  the  party,  and  (2)  the  agreement  of  the  party  to  have 
the  other  for  an  attorney."  ^'^  In  civil  cases,  an  attorney  cannot  be 
compelled  to  act  for  a  party  against  his  will.  An  attorney  has  no 
power  to  appear  and  act  by  ^irtne  of  his  license  alone.  He  must 
be  employed  by  the  party  for  whom  he  appears,  or  by  some  one  au- 
thorized to  represent  such  party.^^  The  act  of  employing  an  at- 
torney is  called  -'retainer."  Formerly  attorneys  were  required  to  be 
appointed  by  warrant,  and  to  file  their  powers  in  court;  ^-  but  that 
practice  has  long  since  been  disused,  and  a  mere  parol  retainer  is 
sufficient.^ ^  The  appearance  of  the  party  by  attorney  instead  of 
personally  must  appear  on  the  record.^*  An  allegation  in  the  plead- 
ings that  the  party  "comes  by  his  attorney"  is  sufficient.^ ^     Tlie  re- 

10  Weeks,  Attys.  at  Law,  p.  388. 

11  McAlexander  v.  Wright,  3  T.  B.  Mon.  (Ky.)  189.  An  attorney  prose- 
cuting a  suit  on  a  chanipertous  contract  cannot  surrender  the  contract  and 
proceed  with  the  suit  in  the  client's  absence,  though  he  he  also  her  attor- 
ney in  fact  under  a  power.     Kelly  v.  Kelly,  86  Wis.  170,  50  N.  W.  G37. 

12  Manchester  Bank  v.  Fellows,  28  N.  H.  302;  McAlexander  v.  Wright,  3 
T.  B.  Mon.  (Ky.)  189. 

13  Manchester  Bank  v.  Fellows,  28  N.  H.  302;  Weeks,  Attys.  at  I^iw, 
§  185;  Owen  v.  Ord,  3  Car.  &  P.  349;  Hirshfield  v.  Landman,  3  E.  D.  Smith 
(N.  Y.)  208;  Hardin  v.  Ho-Yo-Po-Nubby's  Lessee,  27  Miss.  567;  Leslie  v. 
Fischer,  62  111.  118. 

1*  Weeks.  Attys.  at  Law,  p.  401;    Hunter  v.  Neck,  3  Man.  &  G.  181;    Fisher 
V.  Anderson,  101  Mo.  460,  14  S.  W.  629. 
15  Weeks,  Attys.  at  Law,  p.  401;    Parsons  v.  Gill,  1  Salk.  88.     The  veritica- 


4  ATTnlJM  V     AND    ll  IKNT.  (§    2 

Uiiiirr  <»f  an  atloiin-v  may  In-  iiiiplicd,  as  wlii-ic  the  ^'ciu'ral  altoi-ncy 
«>f  a  paity  aitprars  for  him  in  a  |iaiii<ulai'  (  asr.  w  itli  liis  know  It'd;,^' 
and  wiiliont  objection.'"  So  an  unaniliori/.rd  a|iiM:iiaiiii'  1»\  an 
altorm-y  may  he  ralilit'd.'"  or  ilu-  ]iarly  may  l>c  csloiiiird  in  deny  llio 
aullioiiiy.  Where  a  dnly  iieensed  allorney  assnnies  to  a|i|Mai-  tof 
a  parly,  his  anihorily  to  (h*  .so  is  prima  facie  presiimeil.' ''  Sncli  an- 
ihoiity.  lio\ve\ci\  may  he  tpieslioned  eiilier  liy  lie'  aHc^^i-d  clitui  or 
the  opposite  pai'ly.  and  ihe  ]ii  ••snm|)l  ion   lehiillecL 

(Jii  stmnliK/    AttonU'lfK   AuthiJi'ifiJ — llij   Ojijioslf,     J\irfi/. 

When  tlte  opposite  jtai'ty  qnestions  the  anlhoi-ity  of  tlic  atlorin'y 
he  ninst  slate  facts  tending  to  show.  <»i'  the  ;iionnds  ami  reasons 
whicii  induced  him  lo  helie\(\  thai  ilie  alloiney  had  no  aullioriiy 
to  appeal'.'''  Wiien  tiie  want  of  aniiioriiy  to  hrin;^  a  sail  is  shown, 
the  action  slionld  he  dismissed,  on  motion  of  (h'feiidant.-"  "An  at- 
torney is  not  jieiiiiiited  to  commence  a  suit  in  the  name  df  another 
wiihont  liist  receiving  authority  foi-  tlie  purpose,  liis  position  gives 
liim  the  right  to  appear  for  a  suitor  when  emph>yed,  l)nt  none  to 
interfere  in  a  case  in  whicli  he  is  not  retaiued.  *  *  *  He  must 
be  actually  emphiyed  for  the  j»urpose  before  he  can   re])resent    the 

tion  of  a  coniiihiint  by  i)laiutifT  i.s  sufticicnl  written  recognition.  (Jrali.ini  v. 
Aiulrews  (Super.  N.  Y.)  32  N.  Y.  Supp.  795. 

i«  Cooper  V.  Ila  nilton.  52  111.  119;  Tabraui  v.  Horu,  1  Man.  &  U.  22.S; 
Hall  V.  Lavcr.  1  Hare,  571;  Lee  V.  Joues,  2  Camp.  49U;  Reynolds  v.  Howell, 
L.  R.  S  Q.  B.  ."^KS. 

17  rayuu'iit  to  the  attorney  for  services  remlcred  is  a  ratiliciUion.  Ryan 
V.  Doyle,  31  Iowa,  5:5.     See  Oluistead  v.  Firtii,  t;o  Minn.  iL'tj,  (ji  N.  w.  loiT. 

1"  Ilaniillon  v.  Wright,  37  N.  Y.  502;  Dentou  v.  Noyes,  (J  .Johns.  (N.  Y.) 
L".is;  Anioiil  V.  Nye.  2:^  Mich.  29(i;  Norberg  v.  Heineinau,  59  Mich.  210,  20 
N.  W.  4S1;  Lcsli.'  v.  Fischer,  02  111.  118;  Ferriss  v.  Hank.  55  111.  App.  2tS; 
S.liiii/,  V.  Mi-yi-r,  (U  Wis.  418,  21  N.  W.  243;  IMggntt  v.  Addicks,  3  (1.  (Jreene 
(low.i)  427;  Harshey  v.  Blackmarr,  20  Iowa.  Itll;  I)(irs(>y  v.  Kyle,  ."50  Md. 
512;    Osborn   v.    Hank,  !>  Wiieat.   7:iS;    Nuycs   v.   Helding.  5  S.   I).  Co.!.  .".a  N. 

w.  i(x;9. 

">  Pef»ple  V.  M.iriiiDs.M  Co.,  .''/.»  (':il.  tiS3;  Norlierg  v.  Ilciiiciiian.  .">!>  Midi.  "Jlo. 
2i;  .V.  W.  4S1;  H:iiiii]t..n  v.  Wrigiit,  Wi  N.  Y.  .'.o-j;  L.-sii.-  v.  Fis.'lirr,  Cj  111. 
11^;  Kiiili  V.  Wilson,  •!  .Mo.  4:;.".;  Mc.Mrx.iiiil.-r  v.  Wriu'lil,  .'.  I".  1'..  M<>ii. 
iKv.i  ls:t;  'rhoiiias  v.  Steele.  22  Wis.  207;  Schlilz  v.  Meyer,  (!1  Wis.  4tS. 
■Jl  .V.  W.  24.5.  Oltjcction  siiould  be  m.-ide  by  iiiotidU  ix-fore  tri.il.  l*eoi»le 
V.   Lamb.  s.".   iiuii,  171.  .".2  .\.   V.  Siipi).  .'.M. 

2"  Frye"s  Adm'rs  v.  ('ailnnni  Cd.,   11   111.   I.'.-'. 


§    2)  EST  A  H  1, 18 1 1. MK  NT    OF    lUM-ATION.  5 

I);ii(y  ill  coiii't.  'I'lir  rclalioii  of  clicnl  and  adoiiicy  iinisl  sii}).siHt 
botwoen  thcni.  Tliat  idalioii  caniiol  he  ci-calcd  \>y  Hm-  attorney 
alone.  The  suitor  lias  a  ri^lil  to  select  liis  own  atloiney.  If  an 
altoniey  brinj^s  a  suit  in  the  name  of  another,  tlie  lej^al  presumplion 
is  that  lie  lias  been  iclained  for-  the  iiui'posc.  It  is  only  u  Ihmi  liis 
I'i^lit  to  rejiresent  the  plaint ifl"  is  (jueslioned,  and  tin?  ijresuniplion 
that  he  has  been  en;>a^ed  by  him  is  rejK'lled,  that  he  can  be  called 
upon  to  make  proof  of  his  anthority.  But  in  such  a  cas<',  if  he 
fails  to  show  any  authority  to  institute  the  suit,  the  same  slutuld 
be  summarily  dismissed  by  the  court.  *  *  *  A  defendant  is  not 
bound  to  answer  to  the  merits  of  a  suit  commenced  witliout  author- 
ity from  the  plaintiff.  Otherwise,  he  might  be  twice  compelled  to 
litigate  the  same  cause  of  action.  A  judgment  in  his  favor  in  a  suit 
l»rosecuted  without  authority  would  be  no  bar  to  a  second  action 
brought  by  direction  of  the  i»lainti(r."  ^i  The  question  should  be 
raised  at  the  earliest  oi)portunity.  It  cannot  be  entertained  after 
a  default.-^  The  ahidavit  of  the  attorney  himself,  or  his  mere  state- 
ment, is  evidence  of  his  authority.-^  Letters  received  in  due  course 
purporting  to  come  from  plaintiff  may  be  sufficient,  though  he  might 
be  unable  to  prove  the  handwriting.  "All  that  is  required  to  be 
sliown  in  such  cases,  in  tlie  first  instance,  is  that  the  attorney  has 
acted  in  good  faith  and  under  an  authority  appearing  to  be  genuine, 
though  informal.  It  then  devolves  upon  the  party  Impeaching  the 
authority  to  show  by  positive  proof  that  it  is  invalid  or  insufficient 
in  substance."  ^* 

21  Id. 

-•^  Ketd  V.  Curry.  3."  111.  r>3G.  See  Mor;,'an  v.  Thorne.  7  Mees.  &  W.  4r)0. 
Caunot  be  raised  for  the  first  time  on  appeal.  State  v.  Carothers,  1  G. 
Greene  (Iowa)  4CA. 

2  3  Eiokman  v.  Troll,  20  Minn.  124,  12  N.  W.  ;}47;  Penobscot  Boom  Co.  v. 
Lamson,  16  Me.  224;  Manchester  Bank  v.  Fellows,  28  N.  H.  302.  An  affi- 
davit of  plaintiff's  afrent  that  he  was  directed  to  cause  suit  to  be  brought, 
and  tliat  lie  had  employed  the  attorney,  is  sufficient.  Hughes  v.  Osborn. 
42  Ind.  430. 

24  Hardin  v.  Ho-Yo-Po-Xnbby's  Lessee,  27  Miss.  507;  Savery  v.  Savery, 
S  Iowa,  217;  Bush  v.  Miller,  13  Barb.  (\.  Y.)  481;  Grignon  v.  Schmitz,  18 
Wis.   G20. 


0  ATTORNEY    AND    CLIK.NT.  (§    2 

S(n)7(^Bi/  Alleged  CHent. 

Not  only  may  tho  opjajsilo  i)arty  (nicstion  an  attorney's  anllioiity, 
hut  his  alle^'i'd  client  may  do  so.  Wlinc  an  action  is  broii.ulit  with- 
out authoi-ily.  on  i)i'om}>t  applicaliiui  liy  ihc  iilaiuiilV  llic  juocoed- 
m^s  will  bo  stayed.-^  I.aclu's  or  acqniosroncc  will  estop  the  jiarty 
to  dony  tho  attornoy's  authority.-"  It  has  been  held  that  a  judg- 
ment cannot  bo  collaterally  attacked  on  the  j^round  that  the  attor- 
ney's ai)itearani-e  on  which  it  was  entered  was  unautlioi-ized.'-'  A 
distinction  in  this  rejrard  has  been  often  made  between  foreijjn  and 
domestic  judirments.  The  rule  is  well  settled  in  actions  on  forei<;n 
jndjinients  that,  if  the  record  recites  that  the  defendant  ai>i)eared  by 
attorney,  this  may  well  be  conclusive  ])i-oof  that  the  attorney  did 
appear  for  liim;-^  but  it  is  only  prima  facie  evidence  that  the  at- 
torney was  authorized  to  appear  for  him,  and  the  defendant  is  at 
full  liberty  to  prove  that  such  ai)pt'arance  was  unauthorized  or 
fraudulent,  and  consequently  that  there  was  no  jurisilicliou  of  his 
jterson.-^     A  contrary  rule  has  been  ai»i»lied  in  some  stales  to  ac- 

2  5  Harshey  v.  Blackmarr.  20  Iowa,  IGl;  De  Louis  v.  :MiM^k.  2  G.  Groono 
(Iowa)  5o;  Hefferman  v.  Burt.  7  Iowa.  321;  Sherranl  v.  Xcvius.  2  Ind.  24t. 
It  has.  however,  been  held  that  a  party  is  bound  by  an  un.iuthoi-izod  ap- 
pearauce.  Abbott  v.  Dutton.  44  Vt.  54();  Denton  v.  Noyes.  (!  .lohus.  (N. 
Y.)  2'.tS;  En.ch\nd  v.  Garner.  90  X.  C.  197;  Dorsey  v.  Kyle.  30  Md.  512;  Buu- 
ton  v.  Lyford,  37  X.  H.  ol2;    Latucli  v.  Tasherante,  1  Salk.  86. 

2  6  Dorsey  v.  Kyle.  30  Md.  r»12. 

2T  Brown  v.  Xichols.  42  X.  Y.  20;  Haiiiilton  v.  Wri.i^lit.  :>7  X.  Y.  r)(>2;  Iloff- 
niire  v.  Hoffiuire,  3  Edw.  Ch.  (X.  Y.)  174;  Aniericau  Ins.  Co.  v.  Oakley,  0 
Paige  (X.  Y.)  49G;  Finneran  v.  Leonard,  7  AUen  (Mass.)  .")4:  Ix)we  v.  String- 
bam,  14  Wis.  222;  Baker  v.  Stonebraker.  34  Mo.  17");  (".irpentier  v.  City  of 
Oakland.  30  Cal.  439;  Field  v.  Gibbs.  Tet.  C.  C.  l.V).  Fed.  Cas.  Xo.  4,7('.t>. 
Contra.  Wiley  v.  Tratt,  23  Ind.  028;  Hess  v.  Cole.  23  X.  J.  Law,  12.".;  Shum- 
way  v.  Stillniau,  0  Wend.  (X.  Y.)  4.')3;  Sheltou  v.  Titlin.  0  How.  lO."..  See 
Wri^rlit  v.  Andrews,  130  Ma.ss.  149. 

■•'-  In  Ferguson  v.  Crawford,  70  X.  Y.  2.".7.  it  w:\s  licld  tliat  a  (l.-frndant  in 
an  action  on  a  domestic  judgment  migbt  sliow  collaterally  that  what  pur- 
Iiort.s  to  be  an  appearance  on  his  behalf,  sigm-d  by  an  attorney,  attached  to 
tin-  jugment  roll,  is  a  forgery. 

•-■•' Aldricii  v.  Kinney.  4  ("onn.  380;  Hall  v.  Williaii.s.  (i  Tick.  (M.iss.)  2.".2; 
Shumway  v.  Stilluian.  C,  Wend.  (X.  Y.)  447;  Price  v.  Ward,  2."  \.  ^.  Law. 
22.",;  Kooncc  v.  I'.iilliT.  S4  X.  C.  221;  Sherrard  v.  Xevius,  2  Ind.  241;  Boy- 
l:in  V.  Wliitiiey,  :;  Ind.  140;  Welch  v.  Sykcs.  3  (Jilm.  (111.)  197:  Thoiiii>son  v. 
Knuii.Tt,    1.".    111.    410;    Lawrence    v.    Jurvis,    32    111.   3o4;    B.-illz.-ll    v.    .Nuslcr, 


§    2)  ESTABLISIIMKNT    OF    RELATION.  7 

tions  on  domestic  judgments.'"  P.iit  the  better  opinion  is  that  no 
valid  distinction  can  be  drawn,  and  tliat  want  of  jurisdiction  be- 
cause of  want  of  authority  on  llic  i»ai-t  of  the  attorney  to  appear 

1  Iowa.  ,188;  Ilarslipy  v.  Blackinarr,  20  Iowa.  172;  M:ir.\-  v.  Fovo,  .">!  Mo.  r,0; 
Eager  v.  Stover,  59  Mo.  87.  In  the  case  of  Budurtha  v.  Gooflrich,  'A  (iray 
(Mass.)  508,  Chief  Justice  Shaw  remarked:  "It  would  certainly  be  veiy 
strange  if  an  inhabitant  of  another  state  could  thus  be  liouiid  liy  a  court 
having  no  jurisdiction,  without  any  act  or  default  of  such  party.  *  *  ♦ 
We  think  that  where  it  appears  that,  as  in  the  present  case,  the  defendant 
was  an  inhabitant  of  another  state,  that  no  property  of  his  was  attached  by 
trustee  process  or  otherwise,  and  that  he  was  not  served  with  process,  and 
the  only  ground  to  sustain  the  judgment  is  that  he  appeared  by  attorney, 
it  is  competent  for  the  plaintiff  in  error  to  aver  and  prove  that  such  attor- 
ney was  never  authorized  to  appear  for  him  and  thereby  give  the  court  juris- 
diction; and,  even  had  the  record  gone  further,  and  stated  that  such  attor- 
ney was  duly  authorized  and  did  appear,  still  it  would  be  open  to  the 
plaintiff  in  error  to  aver  and  prove  facts  tending  to  show  that  the  court 
had  no  jurisdiction  of  the  cau.se.  and  therefore  that  they  could  make  no  rec- 
ord binding  upon  him,  being  a  stranger,  and  such  record  would  not  be  con- 
clusive. It  would  be  reasoning  in  a  circle,  and  inconclusive,  to  say  that 
the  court  had  jurisdiction  because  it  was  shown  by  their  record  that  the 
defendant  appeared  by  attorney,  and  that  they  had  authority  to  make  such 
record  binding  upon  him,  because  they  had  jurisdiction."  Some  of  the 
earlier  cases  are  contra.  Field  v.  Gibbs,  Pet.  C.  C.  15r>,  Fed.  Cas.  No.  4,700; 
Roberts  v.  Caldwell,  5  Dana  (Ky.)  512;  Edmonds  v.  Montgomery,  1  Iowa, 
143.  This  was  also  the  doctrine  in  Missouri  (see  Warren  v.  Lusk,  IG  Mo.  102; 
Baker  v.  Stonebraker,  34  Mo.  172)  until  the  decision  in  the  case  of  Thompson 
V.  Whitman,  IS  Wall.  457,  after  which  the  courts  felt  obliged  to  conform  to 
the  principles  therein  established.     See  Eager  v.  Stover,  .59  Mo.  87. 

30  Everett  v.  Bank,  58  N.  H.  340;  Field  v.  Gibbs,  Pet.  C.  C.  155,  Fed.  Cas. 
No.  4.76G;  Pillsbury's  Lessee  v.  Dugan's  Adm'r,  9  Ohio,  117;  Campbell  v. 
Bristol,  19  Wend.  (N.  Y.)  101.  In  Denton  v.  Noyes,  b  Johns  (N.  Y.)  297.  it 
was  held  that  a  domestic  judgment  rendered  by  a  court  of  genei-al  juris- 
diction against  a  party  who  had  not  been  served  with  process,  but  for  whom 
an  attorney  of  the  court  had  appeared,  though  without  authority,  was 
neither  void  nor  irregular.  This  is  now  the  settled  rule  in  New  York.  Graz^- 
brook  V.  McCreedie,  9  Wend.  (N.  Y.)  437;  Hamilton  v.  Wright,  37  N.  Y.  502; 
Brown  v.  Nichols,  42  N.  Y.  31.  "The  courts  in  this  state,  while  holding  that 
strictly  domestic  judgments  rendercMl  against  a  party  not  served,  but  for 
whom  an  attorney  appeared  without  autliority,  cannot  be  as.sailed  on  this 
ground  when  coming  in  question  collaterally,  nevertheless  grant  relief  on 
motion,  either  by  setting  aside  the  judgment  absolutely,  or  by  staying  pro- 
ceedings and  permitting  the  party  to  come  in  and  defend  the  action.    Where 


8  ATToliNKY    AND    lI.IKNT.  (§§    3-4 

may  always  lie  st-l    iiji  a^iainsl    llu'  jwdj^nu'iit,   whether  foreign  or 
(Idiiicslic.  and  ih-onciI  l>y  c.Mriiisic'  cvidciict'.''^ 

GENERAL  POWERS  OF  AN  ATTORNEY. 

3.  An  attorney  at  law  has  authority,  by  virtue  of  his  em- 

ployment as  such,  to  do  in  behalf  of  his  client  all 
acts,  in  or  out  of  court,  necessary  or  incidental  to 
the  prosecution  and  management  of  the  suit,  and 
which  affect  the  remedy  only,  and  not  the  cause  of 
action.^- 

4.  More  specifically,  by  reason  of  his  general  authority,  an 

attorney  has  the  following  powers,  inter  alia: 

(a)  He  has  general  control  over  conduct  of  suit;  but, 

(b)  He  cannot  compromise  his  client's  claim. 

(c)  He  may  receive  payment,  even  after  judgment. 

(d)  He  may  enforce  judgment  by  the  usual  means. 

(e)  He  may  employ  subordinates,  but  not  substitutes. 

(f)  He  may  bind  his  client  by  bonds  and  undertakings 

in  cases  of  strict  necessity. 

An  attorney,  like  any  other  agent,  may  bind  his  principal  by  acts 
w  ithin  the  course  of  his  employment.  He  is  employed  to  conduct 
and  manage  a  cause;  that  is,  to  secure  the  remedy,  not  to  discharge 

till'  attorney  is  iusolvent,  the  jiulj,nnont  will  be  absolutely  vacated  and  set 
aside.  Campbell  v.  Bristol,  1<J  Wend.  (N.  Y.)  101.  In  other  oases  the  pro- 
ceedings will  be  stayed,  and  the  party  permitted  to  come  in  and  defend." 
Vilas  V.  Railroad  Co.,  123  N.  Y.  440,  25  N.  E.  941.  In  New  York  a  foreiirn 
judyment  may  be  assailed  collaterally  by  proof  tliat  the  defendant  was  not 
served  and  did  not  appear  in  the  action,  or  where  an  appearance  was  en- 
tered by  an  attorney  that  the  appearance  was  unautliorized.  and  this  even 
wlii-re  tlie  jtroof  directly  contradicts  the  record.  Vilas  v.  Railroad  Co., 
.supra.  A  (hunestic  jud;;ment  against  a  nonresident  not  wiihiu  tlie  jurisdic- 
tion is  governed  by  the  rule  as  (o  foreijjn  judgments.  \'il;is  v.  R:iilroad 
<"<>.,  supra;  Nordliuger  v.  I)e  Mier,  ."4  llun,  27t;,  7  N.  Y.  Sui)p.  4i;;;.  See 
reiison  suggested  for  distinction  by  Dillon,  J.,  in  llarsliey  v.  Hlaekiuarr,  20 
Iowa.    KJl. 

••!i  Reynolds  v.  Kleniing,  .'^0  Kan.  100,  1  Pac.  01;  Ferguson  v.  Ciawfonl, 
Tit  N.   Y.  2.">:!;    Raker  v.  O'RiordMU,  0.")  Cal.  30S,  4  Tac.  232. 

■■■■i  .M..uli..n  V.  Rc.wker.   11.".  .Mass.  30. 


§§    3-4)  GKNERAL    POVVKRS    OV    AN    ATTORNEY.  9 

the  cause  of  action.  This  is  the  fundamental  principle  by  which 
to  determine  what  acts  of  an  attorney  are  bindinj^  ui)on  liis  client.^^ 
Acts  in  or  out  of  court,  incidental  or  necessary  to  the  due  i)rosecu- 
tion  of  the  remedy,  are  pi'ima  facie  within  the  attorney's  authority/* 
and  are  binding  upon  the  client  as  against  innocent  third  persons."" 
I'rivale  instructions  limiting  an  attorney's  actual  authority  are  of 
no  avail,  as  against  third  persons  having  no  knowledge  or  notice  of 
such  liuiitatious.^^ 

Control  of  Suit — Implied  Powers. 

An  attorney  has  full  control  of  a  case  in  court. ^^  In  the  absence 
of  collusion,  a  client  is  bound  by  whatever  his  attorney  does  affect- 
ing tlie  remedy  only.  If  it  be  done  without  actual  authority,  the  only 
remedy  is  against  the  attorney.^"  "It  is  indispensable  to  the  de- 
<'orum  of  the  court,  and  the  due  and  orderly  conduct  of  a  cause,  that 
such  attorney  shall  have  the  management  and  control  of  the  action, 
and  his  acts  go  unquestioned  by  any  one  except  the  party  whom  he 
represents.  So  long  as  he  remains  attorney  of  record,  the  court  can- 
not recognize  any  other  as  having  the  management  of  the  cause."  ^® 
An  attorney's  general  control  over  the  conduct  of  a  suit  has  been 

33  Attorney  cannot  bind  client  by  sale  of  land  sued  for.  Corbin  v.  Mulli- 
■gan,  1  Bush  (Ky.)  297.  Nor  by  purchase  of  land  for  client  at  sale  under 
client's  execution.     Beardsley  v.  Root,  11  Johns.  (N.  Y.)  464. 

3  4  The  attorney  and  not  the  client  has  exclusive  management  of  the  cause 
in  court.     Board  of  Com'rs,  etc..  of  City  of  San  Jos6  v.  Younger,  29  Cal.  147. 

35  Foster  v.  Wiley,  27  Mich.  244;  Clark  v.  Randall,  9  Wis.  1.35;  Moulton  v. 
Bowker,  115  Mass.  30;  Wieland  v.  White,  109  Mass.  392;  De  Louis  v.  Meek, 
2  G.  Greene  (Iowa)  55. 

3  0  Payment  to  an  attorney  of  record  discharges  the  debt  in  spite  of  private 
instructions  limiting  attorney's  authority.  State  v.  Hawkins,  28  Mo.  3G0; 
Pickett  V.  Bates,  3  La.  Ann.  G27. 

37  Whart.  Ag.  §  585;  Nightingale  v.  Railway  Co.,  2  Sawy.  339,  Fed.  Cas. 
No.  10.2(54;  AVard  v.  Hollins,  14  Md.  158;  Clark  v.  Randall,  9  Wis.  135; 
Pierce  v.  Strickland,  2  Story,  292,  Fed.  Cas.  No.  11,147;  Simpson  v.  I>ombas, 
14  La.  Ann.  103. 

38  Moulton  V.  Bowker,  115  Mass.  36;  Gaillard  v.  Smart,  G  Cow.  (N.  Y.)  385; 
Kellogg  v.  Gilbert,  10  Johns.  (N.  Y.)  220;   Anon.,  1  Wend.  (N.  Y.)  108. 

39  Foster  v.  Wiley,  27  Mich.  244;  Sampson  v.  Obleyer.  22  Cal.  200;  Bethel 
Church  V.  Carmack,  2  Md.  Ch.  143;  Greenlee  v.  McDowell,  4  Ired.  Eq.  (N. 
C.)  481;    Chambers  v.  Hodges,  23  Tex.  104. 


10  ATTORXEV    AND    CLIENT.  (§§    3-4 

luld  to  iiicliidc  till'  jiowcr  to  make  st iimlaiioiis  iH'^arilin^^  the  con- 
tliui  of  the  tfial;^"  to  waivf  objritioiis  to  ovidciicc; ''^  to  admit 
facls:^-  to  waive  tiH-hnical  advaiitaj;i's;  *^  to  waive  iiotici's;  ^'  to 
open  defaidts  and  vaeate  the  jiul^Mneut;  *°  to  verify  papers  by  affi- 
da\it/"  Of  waivt'  vei-ification;  ^ '  to  stipulate  for  continuances;*** 
to  extend  the  time  fof  lilin^  pajtcrs  and  jtleadin^s;  "'  to  cliai'j::*'  client 
witli  cost  of  printinj;  briefs;  "^^  to  remit  damages;  ^^  to  afi;ree  to  a 
leference;  ■^-  to  submit  the  cause  to  arbitration;'^^  to  dismiss  the 
cause;  '■'   to  ay:ree  that  execution  shall  be  suspended  after  judg- 

*»  Board  of  Com'rs,  etc.,  of  City  of  San  Jos6  v.  Yonnpror,  29  Cal.  147. 

<i  Town  of  Alton  v.  Town  of  Gilmauton,  2  N.  H.  520. 

*■-  Lewis  v.  Sumuer,  13  Mete.  (Mass.)  2G0;  Farmers'  Bank  of  Maryland  v. 
Spri,!.'!:.  11  Md.  3S9;  Treadway  v.  Railroad  Co..  40  Iowa,  526;  Starke  v. 
Koenau.  11  Ala.  819;  Talbot  v.  McGee.  4  T.  B.  Mon.  (Ky.)  375;  Young  v. 
Wrifrht.  1  Camp.  140;  Smith's  Heirs  v.  Dixon,  3  Mete.  (Ky.)  43S;  Wenans  v. 
Liudsey,  1  How.  (Miss.)  577. 

*3  Town  of  Alton  v.  Town  of  Gilnianton,  2  \.  H.  520;  Hanson  v.  Iloitt, 
14  N.  H.  5C.;    Hart  v.  Spalding.  1  Cal.  21.3. 

**  HelTerman  v.  Burt,  7  Iowa,  320;  Town  of  Alton  v.  Town  of  Gilmanton, 
2  N.  H.  .520. 

4  5  Read  V.  French,  28  N.  Y.  293. 

46  Wright  V.  Parks  10  Iowa,  342;  Bates  v.  Tike,  9  Wis.  224.  He  may 
make  necessary  affidavits,  when  facts  are  within  his  own  knowledge.  Simp- 
son V.  Lombas,  14  La.  .\nn.  103;  Austin  v.  Lathan,  19  La.  88;  Mauley  v. 
Headley,  10  Kan.  88;    Willis  v.  Lyman,  22  Tex.  208. 

47  Smith  v.  Mnlliken.  2  Minn.  319,  322  (Gil.  273). 
4  8  Shaw  V.  Kaider.  2  How.  Prac.  (N.  Y.)  244. 

4»  Hefferman  v.  Burt.  7  Iowa,  320. 

^«  Williamson-Stewart  PapiM*  Co.  v.  Boshysh-'ll,  14  Mo.  App.  .5.34. 

M  Lamb  v.  Williams,  1  Salk.  89. 

•'•2  TifTany  v.  Lord,  40  How.  Prac.  (X.  Y.)  4S1;  Stokely  v.  Robinson,  34  Pa. 
St.  315;    Wade  v.  Powell.  31  Ga.  1. 

63  Connett  v.  City  of  Chicago,  114  111.  2.'..3,  29  N.  ]•:.  2Sti;  Tiltou  v.  Insurance 
Co..  8  Daly  (N.  Y.)  84;  Town  of  Alton  v.  Town  of  ( Jilmanton.  2  N.  11.  .520. 
(••intra.  .McPhcrson  v.  Cox,  8(5  N.  Y.  472;  Sargcant  \  Clark.  Kis  P;i.  St.  588; 
Hask.'ll  V.  ^^■llitney,  12  Mass.  47;  Buckland  v.  Conw.-iy,  K!  Mass.  3:m;;  .Ion- 
kins  V.  (iiilcsple,  10  Smedes  &  M.  (Miss.)  31. 

•'4  (Jailbird  v.  Smart,  V,  Cow.  (.\.  V.)  :'.sr>;  Barrett  v.  Railmnd  Co.,  45  .\.  Y. 
c.i'S;  .McLcran  v.  .Mc.X.imani,  .55  Cal.  .5(i.S;  Davis  v.  Hall,  90  :\1().  ♦;.5',>,  3  S. 
W.  3.S2;    Rogers  v.  Greenwood,  14  Minn.  333  (Gil.  250). 


§§    3-4)  GKNERAL    POWKKS    OF    AN    ATTOUNKY.  11 

iiieiit; '■•''  aud  the  like*."'"  It  lias  been  held  that  an  attorney  has  no 
implied  power  to  assign  the  suit;  ^'^  to  release  indorsers;  °^  to  release 
the  interest  of  witnesses;  °''  to  bind  his  client  by  erroneous  admis- 
sions of  law; ""  to  enter  a  retraxit,  when  it  is  a  final  bar;  "^  to  aj,^ree 
not  to  appeal  or  move  for  a  new  trial. "- 

55  Wieland  v.  "White,  109  Mass.  302;  Union  Bank  of  Georgetown  v.  Geary, 
5  ret.  99. 

!io  Attorney  has  power  to  accept  service,  Ileffernian  v.  Burt,  7  Iowa,  320; 
to  appeal  from  the  decision,  Adams  v.  Robinson,  1  Pick.  (Mass.)  402;  to  re- 
lease an  attachment,  Moulton  v.  Bowker,  115  Mass.  30;  to  confess  judg- 
ment, Denton  v.  Noyes,  G  Johns.  (N.  Y.)  29G.  See  Thompson  v.  Pershinj?,  80 
Ind.  303;  Talbot  v.  McGee,  4  T.  B.  Mon.  (Ky.)  377.  But  see  People  v.  Lam- 
born,  1  Scam.  (111.)  123.  It  is  within  the  scope  of  an  attorney's  authority 
to  agree  that,  if  a  foreclosure  sale  is  effected  pending  an  appeal  from  the 
foreclosure  decree,  the  proceeds  shall  be  held  in  court,  subject  to  be  dis- 
po.sed  of  pursuant  to  the  decision  and  mandate  of  the  appellate  court.  Hal- 
liday  v.  Stuart,  151  U.  S.  229,  14  Sup.  Ct.  302.  As  to  power  to  issue  writs 
outside  of  county,  where  admitted,  see  Hooven  Mercantile  Co.  v.  Morgan, 
15  Pa.  Co.  Ct.  R.  567;  Id.,  4  Pa.  Dist.  R.  48.  As  to  power  to  levy  on  prop- 
erty, and  liability  of  client  therefor,  see  Graham  v.  Reno,  5  Colo.  App. 
330.  38  Pac.  835;  Wiegmann  v.  Morimura,  12  Misc.  Rep.  37,  33  N.  Y.  Supp. 
39;  Fischer  v.  Hetherington,  11  Misc.  Rep.  575,  32  N.  Y.  Supp.  795.  As  to 
power  to  make  stipulation,  see  Beardsley  v.  Poke,  11  Misc.  Rep.  117,  32  X. 
Y.  Supp.  920;  Smith  v.  Barnes,  9  Misc.  Rep.  308.  29  N.  Y.  Supp.  092;  Ives 
V.  Ives,  80  Hun,  130,  29  N.  Y.  Supp.  1053.  Admission  of  service,  Sullivan  v. 
Susong  (S.  C.)  18  S.  E.  208. 

57  Weathers  v.  Ray,  4  Dana  (Ky.)  474;  Head  v.  Gervais,  Walk.  (Miss.)  431; 
Mayer  v.  Blease,  4  S.  C.  10.  An  attorney  to  whom  a  note  is  sent  for  collec- 
tion has  no  authority  to  indorse  the  same  in  the  name  of  his  client.  Sher- 
rill  V.  Clothing  Co..  114  N.  C.  4.30,  19  S.  E.  305 

58  Varnum  v.  Bellamy,  4  McLean,  87,  Fed.  Cas.  No.  16,886;  Kellogg  v. 
Gilbert,  10  Johns.  (N.  Y.)  220;  East  River  Bank  v.  Kennedy,  9  Bosw.  (N. 
Y.)  543;  York  Bank  v.  Appleton,  17  Me.  55;  Mitchell  v.  Cotton.  3  Fla.  134. 
Or  release  a  surety.  Union  Bank  of  Tennessee  v.  Govan,  10  Smedes  <&  M. 
(Miss.)  3;}3;  Savings  Institution  of  Harrodsburg  v.  Chinn's  Adm'r,  7  Bush 
(Ky.)  5.39;    Givens  v.  Briscoe,  3  J.  J.  Marsh.  (Ky.)  529. 

59  East  River  Bank  v.  Kennedy,  9  Bosw.  (N.  Y.)  543;  Murray  v.  House,  11 
Johns.  (N.  Y.)  404;  Browne  v.  Hyde,  0  Barb.  (N.  Y.)  392;  Ball  v.  Bank, 
8  Ala.  590;  Shores  v.  Caswell,  13  Me^^c.  (Mi^ss.)  413;  Marsluill  v.  Xagel, 
1  Bailey  (S.  C.)  308. 

60  Mitchell  V.  Cotton,  3  Fla.  134. 

61  Lambert  v.  Sandford,  2  Blackf.  (Ind.)  137. 

62  People  v.  Mayor,  etc.,  11  Abb.  I'rac.  (N.  Y.)  66.    Contra,  Pike  v.  Emerson,  5 


U  ArroKNKY    AM)   CI.II.M.  (§§   3-4 

Poicfr  to   Compnnnisf'   Chiim. 

Ill  l\n;;l:iiul  it  srciiis  lo  ]»<>  sclflt-tl  tli;it  ;;rin'r;il  aiif liofit}  to  con 
dint  a  causr  i;ivcs  tin-  attoiin-y  pnwci-  to  coiiiin'oiiiisr.'  •  'I'lii-  ((iiiiino- 
niisc  is  Itiiidiiii,'  t»n  tlic  rliciii,  ili«»ii;:li  a;;aiiisl  liis  t'X|ircss  iustnic- 
liniis,  |ii(i\  iilcil  ihis  liiuilai  ion  mi  ihc  ;ii  Ioiihv's  aiiilioiiiy  was  un- 
known to  tin-  «»|i]iosit»'  party.'*  This  iiilc  is  followed  in  somo 
Ann  rican  decisions, "•■  but  Ity  the  wcij,du  of  aiilliority  in  America  at- 
torneys lia\e  no  implied  power  lo  compromise  their  flieiit*8  claims."* 
A  coiiipi  oiuise  may  lie  ralilied  liy  acijiijescence."' 

Jhirr-r  to  Jitveh'ii  l\ii/nu'nf. 

An  attorin'v  has  implied  jiower  to  receive  payment  on  hejialf  of 
his  client,  either  before  or  after  jiid^^meut.""*     lUit,  in  the  absence 

N.  II.  '.VX\.  Attornoy  cannot  rolcas*'  larnislioo  from  attnclinuMit.  Qnarh'S  v. 
Porter.  Ill  .Mo.  70;  nor  agree  that  dismissal  of  an  action  sliall  har  a  subse- 
<in»'nt  action  for  niallcions  prosecution,  Marbonrg  v.  Smith,  11  Kan.  .".."il;  nor 
to  release  his  client's  cause  of  action,  Wadhams  v.  (Jay,  7:5  111.  41.".;  .M.iiule- 
ville  V.  Reynolds,  (iS  N.  Y.  oli-S;  nor  release  proj)!  rty  from  the  lini  nf  a  judj;- 
ment.  Horsey  v.  Chew,  (»."»  Md.  5."),  Tt  Atl.  Ay'A\\  riiilliits  v.  Dobbins,  .Vi  (Ja. 
017;  or  from  the  levy  of  an  ex«H'Ution,  Hanks  v.  Evans,  10  Sinedcs  A:  M. 
iMiss.i  .Ti;    Hciiedi«-t  v.   Siiiilli.   Id  Tai^jce  (N.   Y.)  I'Jf,. 

03  Swinfen  v.  Swinf.-ii,  IS  (".  H.  4S.-).  1  C.  B.  (N.  S.)  .^^►4.  2  De  (;ex  A:  .1.  ."JSl; 
Swlnfen  v.  Swinfen.  r>  Hurl.  \-  N.  S!H>;  Prestwlch  v.  Poley,  18  C.  B.  (N.  S.) 
800;    Strauss  v.  Francis,  VI  Jnr.  (N.  S.)  4S0. 

«♦  Potter  V.  Parsons.  14  Inwa,  'JSi;. 

01  Mallory  v.  .Marin<'r.  1.'.  Wis.  17li;  Widand  v.  Wliitc.  lo-.i  M.ass.  \\\y1;  Peru 
St(H'l  A:  Iron  Co.  v.  Whipple  File  A:  Steel  .Manufj,'  Co..  Id.  404;  Potter  v.  Par- 
s<jns.  14  Iowa,  USO;  North  Missouri  K.  Co.  v.  Stepliens,  .'{•>  .Mo.  l.'>0;  llolker 
V.  Parkf-r,  7  ('ranch.  4,".0;  (e.nlon  v.  Coolid;^e.  1  Sunin.  .">.">7,  Fed.  Cas.  No. 
r>.t^M;. 

«o  Mandeville  v.  Kc-yiiohls.  ('►S  N.  Y.  .V_'S;  Wetiicrbcc  v.  Fit.li.  117  ill.  07: 
7  N.  E.  ni.'l;  Wadhams  v.  (Jay.  7:{  111  41.",;  Kelly  v.  WriKht.  (k"»  Wis.  2.50. 
■JO  N.  W.  010;  Frltchey  v.  Bosley.  .'>0  Md.  '.m;;  Whipple  v.  Whitman,  i:{ 
K.  I.  r.lj;  (;ranjrer  v.  Batclndder,  7A  Vt.  LMs;  Spears  v.  hedtrircrlitr.  ."ii!  .Mo. 
4«;.".;  Is.-iacs  v.  Zu^smiths.  KC.  Pa.  St.  77;  I'iilty  v.  .Miller.  •_'.'.  Pa.  St.  L't'^l; 
Township  of  North  Whitehall  v.  Keller.  1(m»  Pa.  St.  lo.'..  S.-e  llolker  v. 
Parker,  7  Craiich,  4.'{<».  (Jenerally.  as  t<»  the  release  and  compromise  of 
clalniH,  we  Senn  v.  Joseph  (.\la.)  17  Sotitli.  .".4:i;  B.arton  v.  lliiiiicr.  .V.»  .Mo. 
App.  010;  Maxwell  v.  Pate  (.Miss)  10  Soiiiji.  .".J'.i;  .My^'ait  v.  r:irl)i'll,  S,") 
Wis.  4.".7.  .V.  N.  W.  loril;    Armslr<Mi«  v.  Ihirsi,  .'.'.i  S.  (.".  4:»M.  is  S.  E.  l.V). 

67  .Mayer  v.  Foulkro.l.  4  Wasli.  C.  c.  .".11.  Fed.  (as.  .No.  !».;14_'. 

•  •  Hudson   v.  Johuwon,   1    Wash.   (,\a.)   lo;    Carroh   Co.   v.   Chccli.-im,  4S   Mo, 


§§    3-4)  GKNKK.M-    I'OWKHS    OK    AN    ATTdlt.SKV.  13 

of  express  iiiillioi  it  \.  hr  Ii;is  no  ri^ihl  to  accept  :iii\iliiii-  Imi  iiiniiev."" 
('olil'edeiale  liioiiev,  lioiiils,  iioles,  or  oilier  |»ioperl\.  iln.ii-li  Mcceptcd 
l».V  llie  JlKoliiey.  ;iic  not  p;iyilieii(  to  the  client. ""  llr  ni;i\  ree(i\.' 
partial  |»aynients.' '  Imt  (annctt  (lisili;i  i;,'e  tin-  dflitor  e.\ri-pt  upon 
full  payment.'-  Anllidrity  to  leceisc  pannent  is  not  anllinritv  to 
sell  or  assi^ni  llie  claim.' '  I'aynienl  to  an  alliuin-y  without  m»tice 
of  the  revocation  of  his  anlliorily  is  |)a.\  nieni  to  the  client.' *  Where 
UMtney  is  due  on  a  w  til  ten  secuiity,  and  such  s«'curitv  is  not  in 
possession  of  the  altitiin'y,  its  absence  is  itiima  facie  n(.tice  that  he 
has  no  authoi-ity  to  receive  |)ayment.'^ 

.'{S.-,:  I'dwrl  V.  Liltk'.  1  W.  HI.  S;  Voilcy  v.  Carnul.  1'  Dcwl.  400;  Ynfcs  v. 
Fn-cklcteii.  'J  I>(iuK.  02.'?:  Diicctt  v.  Cumiin^'hiiin.  .",!l  Mo.  ;{S(;:  r>iin;,'il<>ii  v. 
rotter,  i:'.  M.iss.  .•'.•_'o;  .Miller  v.  Scutl.  '_M  .\rlv.  :;'.»(;:  Sniytii  v.  II;irvic.  ;!1  III. 
(i2:  W.vckdtr  V.  K(i-;:cii.  1  .\.  .1.  I.:i\v,  214:  White  v.  Johnsnn.  CT  Me.  L'ST. 
The  fact  tliiit  ;ni  atlonicy  has  b.-cii  employed  by  an  executor  in  connection 
Willi  the  wiiidiiifr  up  of  the  testator's  estate  does  not  authorize  him  to 
re<-cive  payment  of  a  mortjrajre  which  had  been  assijrnr'd  to  the  executors, 
he  havin.u'  drawn  the  papers  at  the  time,  where  he  has  not  pos.se.sslon  of 
the  iiiort^'ajre.     liryant  v.  Hamlin's  Ex'rs  (Pa.  Com.  n.)  .'i  Pa.  Di.st.  R.  SSo. 

0"  Walker  v.  Scott,  l.'i  Ark.  044;  (Jullett  v.  Lewis.  3  Stew.  (Ala.)  2:i;  Cost 
V.  Genette.  1  Port.  (Ala.)  212;  Huston  v.  Mitchell.  14  Ser;:.  \-  R.  (Pa.)  307; 
Ixirtl  V.  Burbank.  18  Me.  178;  Treasurer  v.  McDowell.  1  Hill  (.S.  C.)  184; 
(Jarvin  v.  Lowry.  7  Smedes  &  M.  (Miss.)  24;  .Jeter  v.  Haviland.  24  Ga.  2."j2. 
lUit  see  Tavinpston  v.  HadclifT.  0  Rarb.  (N.  Y.)  201. 

-"Trumbull  v.  Nichol.'^on,  27  111.  14!>;  Davis  v.  Lee.  20  La.  Ann.  24S:  West 
V.  Hall.  12  Ala.  340;  Chapman  v.  Cowles.  41  Ala.  lo:;;  Harper  v.  Harvey. 
4  W.  Va.  .•i39;  Kirk's  Appeal,  S7  Pa.  St.  243;  Stackhouse  v.  Ollara.  14  Pa. 
St.  SS;  Herrimau  v.  Sliomon.  24  Kan.  387;  Fassitt  v.  Middletou,  47  Pa. 
St.  214;  Miller  v.  Lane.  13  111.  App.  048;  Smock  v.  Dade.  .-.  Rand.  (Va.i 
(•>,'i!»;  .Tcter  v.  Haviland,  24  Ga.  2.^)2;  Langdou  v.  Potter.  13  Mass.  31!»;  Move 
V.  Cofjdell.  CO  X.  C.  1)3. 

TiDucett  v.  Cunningham.  3,0  Me.  liSO;  Brackett  v.  Norton.  4  Conn.  'Al; 
Miller  v.  Scott,  21  Ark.  300;  Pickett  v.  Bates,  3  La.  Ann.  027;  Rogers  v. 
McKeuzie.  81   N.  C.   1(*4. 

■2  Mecheni,  Ag.  §  817. 

■fs  Herrimau  v.  Shomon.  24  Kan.  ;iS7;  Miller  v.  Lane.  13  111.  App.  048; 
Mechem.  Ag.  §  810. 

'*  Weist   V.  Lee.  3  Yeatcs  (Pa.)  47. 

TO  Smith  v.  Kidd.  CkS  .\.  V.  i;{o;  Doubh-day  v.  Kress.  ."lO  .\.  Y.  41(i;  Wil- 
liams V.  Walker,  2  Sandf.  Ch.  (\.  Y.j  32.->;    Ihiin  v.  Couisby.  1  Ch.  Cas.  'M. 


11  ATTOKNKY    AND    CLIENT.  (§§    3-4 

Pmrrv  to  Enforce  Judijment. 

An  atloiiicy  lias  iini)li('(l  antliority  to  emi)loy  the  usual  uunms 
to  iralizc  on  tho  judj^niont.  Ilo  may  sue  out  and  manage  the  execni- 
lion.'''  delay  its  issue,  or  stay  i)roeeedin<is  under  it;  ''  but  he  cannot 
assi<in  the  jud.umenl.' '  nor  release  the  lien  of  the  judgment  or  execu- 
lion."'  nor  satisfy  the  judgment  without  i)ayment  of  the  full 
amtumt.-"  Hnl  an  attorney's  unauthorized  satisfaction  of  a  judg- 
ment may  l»e  lunding  on  the  client  as  against  a  bona  fide  purchas- 
er/' li  is  said  ihai.  after  judgment,  an  attorney's  powers  are  limit- 
ed to  receiving  satisfaction;  *"'  but  the  tendency  is  to  relax  the  rule. 
An  attorney  employed  to  collect  a  debt  luis  the  same  implied  powers 
after  judgment  as  before.*^  The  authority  may  be  continued  by  any 
acts  showing  the  client's  intention  that  his  attorney  shall  continue 
to  act  in  that  relation.^* 

TO  Inion  Bank  r.  CJcxTry,  5  Pet.  99;  Farmers'  Bauk  of  Maryland  v.  Mackall, 
3  Gill  (Mil.)  447;  White  v.  Johnson.  67  Me.  287;  Gorham  v.  Gale,  7  Cow. 
<N.  Y.)  739;  Lynch  v.  Com.,  10  Serj;.  &  R.  (Pa.)  3G8;  Brackett  v.  Norton,  4 
Conn.  517;  Conway  County  v.  Railroad  Co.,  39  Ark.  50.  He  may  direct  the 
time  and  manner  of  enforcing  execution.     Gorham  v.  Gale,  7  Cow.  (N.  Y.) 

t;». 

"  Wieland  v.  White,  109  Mass.  ;«)2;  Silvis  v.  Ely,  3  Watts  &  S.  420; 
White  V.  Johnson,  67  Me.  287.  But  not  for  so  long  a  period  that  the  judg- 
ment lien  would  be  lost.  Doe  v.  Ingersoll,  11  Smedes  &  M.  249.  After  levy 
of  execution,  attorney  may  delay  a  sale.  Albertson  v.  Goldsby,  28  Ala.  711. 
Attorney  at  law  has  no  authority  to  direct  what  shall  lie  sold  under  his 
client's  execution.  Averill  v.  Williams,  4  Denio  (N.  Y.)  295;  Welsh  v.  Coch- 
ran, 6.3  N.  Y.  185. 

Ts  Banks  v.   Evans,  10  Smedes  &  M.  35. 

70  Banks  v.  Evan.s,  10  Smedes  &  M.  38;  Jewett  v.  Wadleigh,  32  Me.  110; 
Fritchey  v.  Bosley,  56  Md.  96;  Phillip?  v.  Dobbins,  50  Ga.  017.  Or  discharge 
defendant  from  imprisonment.     Kellogg  v.  Gilbert,  10  Johns.  (N.  Y.)  220. 

s'>  Beers  v.  Heudrickson,  45  N.  Y.  065;  Kirk's  Appeal,  87  Pa.  St.  24.1; 
Banks  v.  Evans,  10  Smedes  &  M.  Xi;  Trumbull  v.  Nicholson,  27  111.  149; 
McCarver  v.  Nealy.  1  G.  Greene  (Iowa)  300;  Suioek  v.  Dade,  5  Rand.  (Va.) 
o;;!!;  Lewis  v.  (Janiage,  1  Pick.  (Mass.)  347;  Lewis  v.  Woodruff,  15  How. 
Prac.  (N.  Y.)  .539;  Benedict  v.  Smith,  10  Paige  (N.  Y.)  128;  Jackson  v.  Bart- 
lett.  8  Johns.  (N.  Y.)  1^61;    Chapman  v.  Cowles,  41  Ala.  103. 

-•i  Wyckolf  v.  Bergen,  1  N.  J.  Law,  214;  Wi>.'ks.  Attys.  at  Law,  §  242; 
Wliart.  Ag.  §  .-.S.S. 

6s  Weeks,  Attys.  at  I/nv,  §  2:1s. 

S3  McDnnald  v.  Todd,  1  (irant  (Pa.)  17;    Bullir  v.  Knight,  L.  H.  2  Exch.  109. 

«♦  Id.;    Weeks,  Attys.  at  Law,  §  238. 


§§    3-4)  GENERAL    POWERS    OF    AN    ATTORNEY.  15 

Employment  of  Subordinates  and  Siihstitutes. 

The  relation  of  attorney  and  client  is  peculiarly  a  relation  of 
trust  and  confidence.  Because  of  the  attorney's  lai-jjje  discretion- 
ary powers,  he  is  presumably  chosen  for  personal  i-easous,  and  there- 
fore he  cannot  delegate  his  authority  to  a  substitute  without  the 
client's  consent.*''  Sui-li  consent,  however,  may  be  either  express 
or  implied,  or  such  delegation  may  be  ratified,  in  either  of  wliich 
cases  the  substitute  becomes  authorized  to  act  for  the  client. 
Ratification  may  be  presumed  from  acquiescence.*"  The  retainer 
of  one  member  of  a  firm  is  a  retainer  of  all,  and,  unless  otherwise 
stipulated,  the  cause  may  be  argued  and  conducted  by  any  one  of 
tliem.*^  Matters  not  involving  discretion,  however,  may  be  delegat- 
ed to  subordinates,  to  be  performed  under  the  direction  and  control 
of  the  attorney.** 

Pmver  to  Bind  Client  l)y  Bond. 

Where  the  execution  of  a  bond  or  other  undertaking  becomes 
necessary  in  the  due  prosecution  of  a  cause,  and  it  is  impossible  to 
communicate  with  the  client  in  time  to  accomplish  the  object,  an 
attorney  has  implied  power  to  execute  the  bond  or  undertaking  in 
his  client's  name,  provided  it  is  not  required  to  be  under  seal;*-* 
or  he  may  do  so  in  his  own  name,  and  look  to  his  client  for  in- 
demnity."**    The  power  exists  only  in  case  of  necessity,''^     Where 

85  In  re  Bleakley,  5  Paige  (N.  Y.)  311;  Hitclioock  v.  McGehee,  7  Port. 
(Ala.)  55G;  Kellogg  v.  Norris,  10  Ark.  18;  Ratcliff  y.  Baird,  14  Tex.  43;  An- 
trobus  V.  Sherman,  6.5  Iowa,  230,  21  N.  W.  579;  Smalley  v.  Greene,  52  Iowa, 
241,  3  N.  W.  78;    Dickson  v.  Wright,  52  Miss.  585. 

8  6  Eggleston  v.  Boardnian,  37  Mich.  14;  Briggs  v.  Georgia,  10  Vt.  68.  Cli- 
ent is  not  bound  by  acts  of  unauthorized  substitute.  Kellogg  v.  Norris,  10 
Ark.  18.  See,  also,  Dickson  v.  Wright,  52  Miss.  .585.  A  client  is  not  liable 
to  an  attorney  for  services  rendered  without  his  knowledge  at  the  request 
of  the  attorney  employed  by  him.  Moore  v.  Orr,  10  Ind.  App.  89.  37  N.  E. 
5.54.     Cf.  Hyde  v.  Nerve-Food  Co.,  160  Mass.  5.59,  30  N.  E.  .585. 

8^  Eggleston  v.  Boardman,  37  Midi.  14;  Ganzer  v.  Schiffbauer,  40  Neb.  63.3, 
59  N.  W.  98. 

88  Eggleston  v.  Boardman.  supra;  McEwen  v.  Mazyck,  3  Rich.  Law  (S.  C.) 
210. 

89  Clark  V.  Courser,  29  N.  H.  170. 

90  Clark  v.  Randall,  9  Wis.  1^5. 

91  Clark  V.  Randall,  supra;  Schoregge  v.  Gordon,  29  Minn.  367,  13  N.  W. 
1&4;    Fulton  v.  Brown,  10  La.  Ann.  350;    Mechem,  Ag.  §  816. 


1(5  ATTORNEY    AND    CUENT.  (§    ^ 

,lu'  .•liont  is  pirscnt.  or  within  reach,  and  can  act  for  himself,  the 
attorney  has  no  such  implied  power.  It  has  been  held  he  has  no 
power  to  execute  an  appeal  -  or  replevin  bond.-  The  attorney's  un- 
authorized act  is  ratified  by  the  acceptance  of  benefits."* 

RIGHTS  AND    LIABILITIES  -  GOOD   FAITH  AND  FAIRNESS. 
5.  An  attorney  must  exercise  perfect  good  faith  and  fair- 
ness in  all  liis  dealings  with  his  client. 

An  attorney  is  bound  to  the  highest  honor  and  integrity  and  the 
utmost  good^faith  in  all  his  transactions  with  his  client."^     The 
relation  is  a  fiduciary  one  of  the  closest  intimacy,  and  is  jealously 
guarded  by  the  courts.     Transactions  between  attorney  and  client 
by  which  the  former  obtains  a  benefit  are  closely  scrutinized,  and 
all  the  rules  and  presumptions  which  apply  in  the  case  of  other 
riduciary  relations  apply  with  special  force  to  this.««     "Where  a 
solicitor  purchases  or  obtains  a  benefit  from  a  client,  a  court  of 
equity  expects  him  to  be  able  to  show  that  he  has  taken  no  ad- 
vantage of  his  professional  position,  that  the  client  was  so  dealing 
with  him  as  to  be  free  from  the  influence  which  a  solicitor  must 
necessarily  possess,  and  that  the  solicitor  has  done  as  much  to  pro- 
tect his  client's  interest  as  he  would  have  done  in  the  case  of  a 
client  dealing  with  a  stranger."  "     If,  while  acting  as  attorney,  one 

9  2  Clark  y.  Courser.  29  N.  H.  170;  Ex  parte  Holbrook,  5  Cow.  35.  Though 
an  attorney,  by  virtue  of  his  employment,  may  execute  in  the  name  of  client 
bonds  on  appeal  (Comp.  St.  Neb.  c.  7,  §  7),  he  is  not  authorized  to  thus  exe- 
cute an  indemnity  bond  to  the  sheriff  (Luce  v.  Foster,  42  Neb.  818,  60  N.  W. 

1027). 

•J3  Narraguagus  Land  Proprietors  v.  Wentworth,  36  Me.  339. 

0  4  Bank  of  Augusta  v.  Conrey,  28  Miss.  667. 

05  Cox  V.  Sullivan,  7  Ga.  144. 

OG  Mechem,  Ag.  §  82L  As  to  purchase  ot  client's  property  and  of  claims 
against  client,  see  Mitchell  v.  Colby  (Iowa)  63  N.  W.  769;  Sutheriaud  v. 
ifeeve,  151  111.  384;  38  N.  E.  130;  Owers  v.  Olathe  Silver  Min.  Co.  (Colo. 
App.)  39  Pac.  980;    Kreitzer  v.  Crovatt,  94  Ga.  694,  21  S.  E.  585. 

07  Sayery  v.  King,  5  H.  L.  Cas.  655.  See,  also,  Merryman  y.  Euler.  59 
Md.  588;  Whipple  v.  Barton,  63  N.  H.  613,  3  Atl.  922;  Yeamans  v.  James, 
27  Kan.  195;  Gray  v.  Emmons,  7  Mich.  .533;  Laclede  Bank  y.  Keeler,  109 
ID.  385;  Kisling  y.  Shaw,  .33  Cal.  425;  Starr  v.  Vanderheyden,  9  Johns.  2.53. 
Zeigler  v.  Hughes,  55  111.  288. 


§    5)  GOOD    FAITH    AND    FAIRNESS.  17 

buys  property  sold  in  the  course  of  litigation,  he  holds  as  trustee  for 
the  client.^*  "An  attorne3^  can  in  no  case,  without  the  client's  con- 
sent, buy  and  hold,  otherwise  than  in  trust,  any  adverse  title  or  in- 
terest touching  the  thing  to  which  his  emplo^Tuent  relates."  ®^  The 
fact  that  one  of  the  parties  to  a  contract  is  an  attorney,  and  that  he 
offers  to  and  does  draw  the  necessary  writings  without  charge,  does: 
not  establish  the  relationship  of  attorney  and  client  between  them, 
or  impose  upon  the  attorney  the  duties  and  obligations  of  that  re- 
lationship, or  raise  a  presumption  of  fraud  against  him.  Nor  do 
these  facts,  or  the  inference  (which  may  be  drawn  from  the  nature 
of  his  business)  that  by  reason  of  superior  experience,  sagacity,  and 
shrewdness  he  may  have  exercised  some  control  over  the  other  party, 
and  so  have  obtained  an  advantage  in  the  contract,  establish  or 
justify  a  finding  of  undue  influence.  There  must  be  evidence  show- 
ing some  confidential  relationship  or  intimacy  between  the 
parties.^*"*  It  is  an  attorney's  duty  to  disclose  any  adverse  interest 
that  he  may  have,  personally  or  as  attorney  for  others,  and,  having 
accepted  a  retainer,  he  cannot  thereafter  accept  conflicting  inter- 
ests.^^'^  An  attorney  cannot  act  as  such  to  both  parties.^"-  These 
obligations  of  an  attorney-  will  be  enforced  summarily  by  the  court, 
by  virtue  of  its  control  over  its  own  ofiflcers,  or  they  may  be  enforced 
by  private  action.^ '^•'* 

9f  Taylor  v.  Young,  56  Mich.  28.5,  22  N.  W.  799;  Pearce  v.  Gamble,  72  Ala. 
341;    Bylngton  v.  Moore,  62  Iowa,  470,  17  N.  AV.  644. 

99  Henry  v.  Raimad,  25  Pa.  St.  3.54.  See,  also.  Smith  v.  Brotherline,  62 
Pa.  St.  461;  Hockenbiiry  v.  Carlisle,  5  Watts  &  S.  348;  Case  v.  Carroll,  35 
N.  Y.  385;  Giddings  v.  Eastman,  5  Paige  (N.  Y.)  561;  Moore  v.  Bracken, 
27  111.  23.  See  Cameron  v.  Lewis,  56  Miss.  601,  as  to  attorney's  right  to 
purchase  of  tax  title  of  client's  land.  Cf.  Bowers  v.  Virden,  56  Miss.  595. 
See,  also.  Harper  v.  Perry,  28  Iowa,  58;    Baker  v.  Humphrey,  101  U.  S.  494. 

100  Stout  V.  Smith,  98  N.  Y.  25. 

101  Williams  v.  Reed,  3  Mason,  405,  Fed.  Cas.  No.  17,733;  Mechem,  Ag. 
§  822. 

102  Mechem,  Ag.  §  823. 

103  Cooley,  Torts,  p.  618. 

ATTY.  &  CL.— 2 


IS  ATTORNEY    AND    CLIENT.  (§    6 


SAME— DUTY  TO  ACCOUNT— LIABILITY  FOR  MONEY 

RECEIVED. 

6.  An  attorney  must  account  for  property  of  the  client 
coming  into  his  possession,  and  promptly  pay  over 
money  collected  for  the  client's  account. 

An  iittoriu'V  niiisl  account  to  his  client  for  money  or  property  of 
the  latter  coinino-  into  his  hands.  An  action  cannot  ordinarily  be 
maintained  ajiainst  an  attorney  for  money  collected  by  him  as  such 
until  after  a  demand  and  refusal  to  pay  over.^"*  But  it  is  the  at- 
torney's duty  to  notify  his  client  of  the  receipt  of  money  within  a 
reasonable  time,  and,  if  he  fails  to  do  so,  an  action  may  be  main- 
tained without  a  demand.^°=  The  statute  of  limitations  does  not 
run  against  such  an  action  until  the  client  has  notice  of  the  col- 
lection.^"* Where  the  attorney  retains  the  money  an  unreasonably 
lon^'  time,  or  converts  it  to  his  own  use,  he  is  liable  for  iuterest.^"^ 
Min<rlin<]:  his  client's  funds  with  his  own,  or  depositing  them  in  a 
bank  in  his  own  name,  amounts  to  a  conversion,  and  therefore,  if 
the  bank  fails  before  payment,  the  attorney  and  not  the  client  must 
bear  the  loss. 

104  Jett  V.  Hempstead,  25  Ark.  464;  Chapman  v.  Burt,  77  111.  337;  Black 
V.  Herscli,  18  lud.  342;  Roberts  v.  Armstrong's  Adm'r,  1  Bush  (Ky.)  203. 
Cf.  Schroeppel  v.  Corning,  6  N.  Y.  117;    Lillie  v.  Hoyt,  5  Hill  (N.  Y.)  395. 

105  Jett  V.  Hempstead,  25  Ark.  404;  Chapman  v.  Burt,  77  III.  337;  .Tordan 
V.  Westerman,  02  Mich.  170,  28  N.  W.  826. 

106  Jett  V.  Hempstead,  25  Ark.  464;  Voss  v.  Baehop,  5  Kan.  07;  Way  v. 
Cutting.  20  N.  H.  187. 

107  Chapman  v.  Burt,  77  111.  337;  Ketcham  v.  Thorp,  91  111.  Oil;  Dwight  v. 
Simon,  4  La.  Ann.  490;  Walpole's  Adm'r  v.  Bishop,  31  Ind.  156;  Mansfield 
V.  Wilkerson,  26  Iowa,  482.  Ordinarily  a  demand  is  necessary  to  show  con- 
version and  start  running  of  interest.  Johnson  v.  Semple,  31  Iowa,  49;  Wal- 
pole's Adm'r  v.  Bishop,  31  Ind.  156.  Liability  for  diversiou  of  fund,  see 
Ilieliardsou  v.  Richardson,  lOU  Midi.  364,  59  N.  W.  178.  Money  withheld  by 
atioriicy.  ("o.x  v.  Delmas,  99  Cal.  104,  33  Pac.  836;  C.  Aultmau  &  Co.  v.  Gold- 
sniitli,  S4  Iowa,  547,  51  N.  W.  43.  Summary  proceedings  to  enforce  pay- 
ni.-iit.  Cilltspie  v.  Mulholland  (Com.  PI.)  33  N.  Y.  Supp.  33;  Mundy  v. 
Strong  (N.  J.  Err.  &  App.)  31  All.  611;  McKibbin  v.  Natis,  76  Hun,  344,  27 
N.  Y.  Supp.  723. 


§7)  LIABILITY    FOR    NEGLIGENCE,  19 


SAME— LIABILITY  FOR  NEGLIGENCE. 

7.  An  attorney  must  possess  and  exercise  that  reasonable 
degree  of  skill  and  care  which  is  ordinarily  pos- 
sessed by  other  attorneys  in  the  same  locality. 
Failure  to  do  so  is  actionable  negligence. 

An  attorney  is  bound  to  possess  and  exercise  diligently  and 
faithfully  that  reasonable  degree  of  learning,  skill,  and  experience 
which  is  ordinarily  possessed  by  other  members  of  the  profession. 
Undertaking  to  exercise  judgment  in  a  matter  which  requires  skill 
is  not  a  mere  error  of  judgment,  but  is  negligence/"^  As  to  at- 
torneys, Tindal,  C.  J.,  has  said:  ^"'^  "It  would  be  extremely  difiicult 
to  define  the  exact  limit  by  which  the  skill  and  diligence  which  an 
attorney  undertakes  to  furnish  in  the  conduct  of  a  cause  is  bounded, 
or  to  trace  precisely  the  dividing  line  between  that  reasonable  skill 
and  diligence  which  appears  to  satisfy  his  undertaking  and  that 
^crasse  negligentia'  or  'lata  culpa,'  mentioned  in  some  of  the  cases, 
for  which  he  is  undoubtedly  responsible.  The  cases,  however, 
*  *  *  appear  to  establish,  in  general,  that  he  is  liable  for  the 
consetjuences  of  ignorance  or  nonobservance  of  the  rules  of  practice 
of  this  court,^^"  for  the  want  of  care  in  the  preparation  of  the  cause 
for  trial  ^^^  or  of  attendance  thereon  with  his  witnesses,  and  for  the 
mismanagement  of  so  much  of  the  conduct  of  a  cause  as  is  usually 
and  ordinarily  allotted  to  his  department  of  the  profession;  while, 
on  the  other  hand,  he  is  not  answerable  for  error  in  judgment  upon 
points  of  new  occurrence  or  of  nice  or  doubtful  construction."     "God 

108  City  of  Terre  Haute  v.  Hudnut,  112  Ind.  542,  13  N.  E.  6S6. 

109  Godefroy  v.  Dalton,  6  Bing.  4G7,  469.  Fiu'ther,  as  to  difference  as  to 
Englisli  members  of  tlie  bar,  see  Ireson  v.  Pearman,  3  Barn.  &  C.  799.  An 
action  for  professional  negligence  will  not  lie  against  tlie  barrister.  Swinfen 
V.  Chelmsford,  5  Hurl.  &  N.  918,  29  Law  J.  Exch.  382. 

110  Caldwell  v.  Hunter,  10  Q.  B.  83;  Bracey  v.  Carter,  12  Adol.  &  E.  373. 
Negligently  suffering  judgment  by  default.  Godefroy  v.  Jay.  7  Bing.  413; 
Hoby  V.  Built,  3  Barn.  &  Adol.  350. 

111  Or  bringing  an  action  in  a  court  without  jurisdiction.  Williams  v. 
Gibbs,  6  Nev.  &  M.  788;  Cox  v.  Leech,  1  C.  B.  (N.  S.)  617,  26  Law  J.  C.  P. 
125.     Cf.  Meredith  v.  Woodward,  16  Wkly.  Notes  Oas.  146. 


20  AT'n'KNKY    AM)    (I  IK. NT.  (§   7 

foiliid  lli;il  il  ^lll•^ll(i  In-  iiiiM^Mind  ilial  ;m  ;il  Iitrinx .  or  r\i-ii  :i  jiulm'. 
is  IkmiiuI  ti»  kiuMv  all  tin-  l;i\\."  "■'  'riii-  li;iliilii\  of  an  llii^lisli  aiioi'- 
ii«-y  or  solicifoi- ' '  '  is  rsstntiallv  tiuil  of  a  iiniiilM-r  i»f  iln-  liar  in 
Aiiinica.  \i/..  lit-  is  i«MiiiiiT(l  to  cxfiTisc  siicli  (lili;^i'iirf  as  a  ^imd 
la\v\»r  is  a<  Tiisiiiuifd  to  a|i|ily  midi'i-  similar  liiciinisiaiiti's.' ' '  lio 
laimot  In-  litid  liaM(>  for  a  mistake  in  rcfci-riirr  to  a  iiiatli'i-  as  lo 
nliitli  iiH-mlifi's  of  ilic  pfofrssioii  |iosscssim]  (»f  n-asoiiahli'  skill  and 
know  I»d;:r  may  dilVrr  as  t(»  the  law  iiiilil  il  has  lic.-n  si-iilrd  in  tlif 
coiiris.  nor  if  In-  is  mistaktii  in  a  |M»ini  of  law  on  wliidi  irasonahlo 
doulit   may  lir  fntfiiaincd  liy  wdl  infoiiiifd  la  wyrrs.' '  ■'     Tlif  stand- 

'•2  Altltntt.  (".  J.,  ill  Montriou  v.  .Irfforys.  2  (":ir.  \  I".  11.!.  I.onl  Manstlrids 
sjiyiii;;  ill  ritt  V.  Yaltloii.  4  Huirows,  'J(M>n,  'J(h;1.  Is  famous:  "'riiat  i)art  of 
tlio  prnffssioii  wliU-h  is  carritHl  on  by  att<»ru»'ys  is  librral  ami  rcpuialtlc  as 
w«'ll  as  useful  to  the  puhlic.  wlit'U  tlioy  coiuiuct  tluMusflves  with  Ikhiop  and 
IntoKfity:  ami  they  ou;:lit  to  W  i)rot»'<-t»'(l  when  they  act  to  the  best  of  their 
skill  and  knowledjie.  Hut  every  in.in  is  liable  to  error,  ami  1  slioulil  be 
very  sorry  that  It  should  be  taken  for  ^'ranted  that  an  attorney  is  answer- 
able for  every  error  or  mistake.  •  ♦  •  A  counsel  may  mistake,  as  well 
as  an  attorney.  Yet  no  one  will  .say  that  a  counsel  who  has  been  mistaken 
shall  be  charncil.  ♦  *  ♦  .\,,t  only  n  counsel,  but  judges,  may  differ  or 
doubt,  or  take  time  to  consi<ler.  Tlievfoiv.  an  allomey  oupht  not  to  bo 
li.-ible  in  ca.se  of  a  reasonable  doubt."  '1  he  sayin;;  of  I/ord  Cottenham  in 
H.-irL  V.  Frame,  C,  Clark  A:  V.  VXi.  is  al.so  much  iiuoted.  Kt  videLaidler  v.  El- 
liott, .*{  Harn.  A:  ('.  T.'tS;    Russell  v.  Talmer,  2  Wils.  :V2r,. 

in  Hart  v.  Frann-.  «;  (Mark  A:  F.  lit:',;  Caldwell  v.  Hunter,  in  (}.  H.  S.".: 
I'.irker  v.   Holls,  14  (".  H.  f.'.il;     I'urves  v.   Landell.  12  ("l.irk  \   1'.  '.U. 

11*  Wh.irt.  N»').'.  8  74'.t;  Spra^ue  v.  Kaker,  IT  Mass.  :,S{\;  Kejiler  v.  .Tessu|), 
11  Ind.  App.  241,  'M  N.  E.  H'Cf.  Isliam  v.  I'.arker.  :\  Wash.  St.  7.V..  21)  F.ic. 
Kl',:  White  V.  WashiliKfon,  1  Uaiiies.  Notes  ("as.  Ill:  Ibliues  v.  I'eclc.  1  ]{. 
I.  242;  .'Elevens  v.  Walker,  .V.  111.  l.'.l;  Wilson  v.  Kuss.  l'o  M,..  421;  ."^itubbs 
V.  Heeiie'.s  Adin'r,  .''.7  Ala.  (r27;  (Jambert  v  H.in.  44  (  al.  .'.42.  Kcisonabl.- 
•  are  and  diliuence.  Kepler  v.  .Tessup.  11  Ind.  Ai)p.  241,  .'57  N.  10.  <;.'..'..  .\  con- 
tract for  the  services  of  iniMiibers  of  a  le^al  profession  Is  not  a  hirim:  of 
labor,  bin  a  m.imlate.  (Jurley  v.  City  of  New  nrle.iiis.  41  l..i.  .\nn.  7."i.  ."> 
.•^outh.  Cilt.  (Jenerally,  as  to  liability  of  ;ittorneys  for  erri>neous  .advice,  see 
4  Vale  Law  .1.  r>r,,  by  William  H.  liosley.  (;.'ner;illy.  as  to  liability  for  ne;;- 
lli;ence,  see  Ke|der  V.  ,Iessup,  11  Ind.  .\|»p.  211.  .''.7  .\.  I'.  <">."<.".;  Wain  v.  He.iver. 
H;i  I'a.  St.  tyi.",.  21t  All.  114,  4:t:{;  Ahlh.auser  v.  Hutler.  .".7  Fed.  121;  I'iiikston 
V.  ArriiiKlon,  !ts  .\i.i.  4Mi,  11'.  Soiitli.  :,i\]\  Colin  v.  Hensnei-.  <.i  Mis..  K.-p.  4.S2, 
'.Vt  N.  Y.  Su|ip.  241;    Kin;:  v,   Fourchy,  47   La.  Ann.  ."..".4,  \t\  South.  .S14. 

US  citizens'  I.,<.an  Fund  \-  Sav.  Ass'n  v.  Fiiedley.  1'2:{  Ind.  14.'?,  2.'?  N.  K. 
lo7.',.      Cf.   Coclir.iiie   v.    Little,   71    .Md.  :i2.'!.    IS   .Ml.  C.is.      Aii   aitornev  ciinioi 


§    7)  1  lAHlI.ITY     Idll    MHil.KiKNCK. 


21 


jird  of  skill  r.(iiiii<(l  ol'  l;i\v,\frs  is  siilisliiiil  i;ill  v  the  saim-  as  that  of 
j)hvsi('ijiiis."''  It  is  (Iciciinincil  I'V  llic  particular  prariic-  of  tin- 
part  iciilai-  bar.  "A  iiicl  luiM.lilaii  slaiMJaid  is  not  to  ap|ilii«l  to  a 
rural  bar.""'  A  law.vn'  is  not  cxiicii.d  to  ;,Miaraiil.v  siiicohs.' '" 
This  standard  would  not  sccni  consist,  nt  witii  tin-  carl.v  thtM.i.v  that 
an  attorncv  at  law  is  lud  liable  if  he  acts  hoin-stly  and  to  the  best 
of  his  ability."'  Of  course,  he  must  exercise  reasonable  dili;;ence 
•generally   in   the  conduct    of  his  client's  business.'-"     Thus,   in   ex- 

l)c  cli:irirc(l  Willi  iii'jrliL'-i'MiM'  wlicii  lie  accepts,  ns  a  cori-fct  exposition  of  tlie 
law.  a  .jccisioii  of  tile  supieiiie  coiii-t  of  liis  State  ill  aiiollior  case  upon  tlie 
question  of  the  lialtilMy  of  stockliolders  of  corporations  of  the  state,  in  ad- 
vance of  any  decision  thereon  in  his  own  case.  Marsli  v.  Wliitniore,  'Jl 
Wall.  17.^.  Nor  is  lie  lial»le  for  an  iiisiilticieni  atlidavit  in  atta<'linient.  .Vlil- 
hauser  v.   Hutler,  ~>~  Feil.  121. 

110  Watson  V.  Muirhead,  .".7  Pa.  St.  ICl.  "The  law  is  not  a  mere  art. 
but  a  science."  Sliarswood,  J.,  in  Citizens'  Loan,  Fund  &  Sav.  Ass'n  v. 
Friedley,  12.3  lud.  14.'i.  2.3  N.  E.  107."),  reviewing  many  cases.  Approved  in 
Nickless  v.  rearson.  12(1  Ind.  490,  2()  N.  E.  47S. 

iiTWe»'ks.  Attys.  at  Law,  §  280;  I'ennington's  Ex'rs  v.  Yell,  11  Ark.  212; 
Whart.  Nep.  §  7.".(). 

118  Weeks,  Attys.  at  Law,  §  200. 

110  Lynch  v.  Com.,  IG  Serg.  &  R.  (Pa.)  30)8;  Croshie  v.  Murphy,  8  Ir.  C.  L. 
301;  Kemp  v.  Burt,  4  Barn.  &  Adol.  424;  Gilbert  v.  Williams,  8  Mass.  57.  He 
has.  however,  been  held  liable  for  gross  negligence.  Turves  v.  Landell.  12 
Clark  A:  F.  91;  Baikie  v.  Chandless,  3  Camp.  17;  Elkingtou  v.  Holland.  I)  Mees. 
&  W.  r,c,i. 

120  Failing  to  commence  an  actiou  against  a  debtor  in  failing  circum- 
stances, Khines'  Adinis  v.  Evans,  UO  Pa.  St.  192;  or  in  time  to  avoid  bar 
by  the  statute  of  limitations.  Fox  v.  Jones  (Tex.  Ai>p.)  14  S.  W.  1007;  Hett 
V.  Pun  Pong,  IS  Can.  Sup.  Ct.  2!X);  failing  to  be  present  when  his  case  is 
reached.  City  of  Lincoln  v.  Staley,  32  Neb.  63.  48  X.  W.  887;  or  to  advise 
client  as  to  expenses  on  appeal.  Jamison  v.  Weaver,  81  Iowa,  212.  40  N. 
W.  9W;  making  negligent  investments,  Blyth  v.  Fhulgate  [1891]  1  Ch.  337 
(et  vide  Mellish.  L.  J.,  in  Sawyer  v.  Goodwin,  1  Ch.  Div.  351);  loaning  money. 
Whitney  v.  Martine.  88  N.  Y.  535;  for  not  notifying  his  client  of  imi)ending 
tax  sales.  ANaln  v.  Beaver,  IGl  Pa.  St.  005,  20  Atl.  114,  493;  for  negligence 
in  preparing  mechanic's  lien,  Joy  v.  Morgan,  35  Minn.  184.  28  N.  W.  237; 
generally,  for  misdescription,  Taylor  v.  (Joiinan,  4  Ir.  Eq.  550;  for  loss  of 
bond.  Walpole  v.  Carlisle,  32  Ind.  415.  Not  liable  for  failure  to  transfer  in- 
surance policy  to  vendee,  Herbert  v.  Lukens.  153  Pa.  St.  180,  25  Atl.  1110. 
When  not  liable  for  failure  to  plead  statutory  limitations,  Thompson  v.  Dick- 
inson. 1.59  Mass.  210.  34  \.  E.  202. 


22  .vrroKNKV   and  ri.iKST.  (s   'i' 

ainiiiatioii  of  litlt-s.  In-  imisi  sci-iilini/.f  vi.uil;mil.\ .  and  is  lialilr.  for 
txamplr.  for  failnic  l«»  iiolc  ilio  exist. 'iicc  of  an  intMinihranrc.'-' 
r.iil.  as  to  (lonlitfnl  jtoints  of  law.  it  is  snllirimt  if  he  conforms  to  the 
standaid  of  ;:oo(l  profrssional  im-n  of  iii»'  |ilair.' --  An  ailorncv,  as 
hailfi-  of  |iai»t'is  (»r  oiIkt  |iio|>riM_v  of  liis  client,  is  lialtle  for  failure 
to  exercise  ordinarv  care  and  diliueiice. 
X' <//!</(  >!(•(•  of  As.stn'idfr.f,   J'di'durs,  (ind  Si//»)/-<///Hff>s. 

An  attorney  is  not  liable  for  the  n('},di^rence  of  an  associate,  as 
(list  in.unislied  from  a  paitner  oi-  subordinate,  where  such  associato 
is  employetl  by  the  client.  (U-  emjjloyed  by  tiie  attorney  with  the 
(  bent's  consent,  express  or  imi>lied,  as  where  it  is  necessary  to  eni- 
jtloy  an  associate  to  take  dei)ositions  in  a  distant  city.  An  attor- 
m  y,  however,  is  liable  for  nej^liiicnce  in  selecting;  an  associate. ^-^ 
Attorneys  are  also  liable  for  the  ne^ii;^ence  of  their  ]>artners,'-* 
clerk.s,  or  subordinates.'-^  This  liability  rests  on  familiar  principles 
of  a;,'eney. 

1:1  rciinoycr  v.  \N'illis  (Or.)  32  Pac.  ."jT.  Put.  oven  undn-  siicli  circum- 
stancos.  the  question  of  ue^ilijrence  has  been  left  to  tlie  jury.  Tinlvston  v. 
Arrinsrton.  its  Ala.  480,  13  South.  5G1.  And  see  Hinckley  v.  Krug  (Cal.)  34 
I'ac.  lis. 

1  =  2  Watson  V.  Muirhead,  57  Pa.  St.  KU;  Whart.  Ag.  §  .".07;  Potts  v.  Dut- 
ton.  S  Beav.  403;  Taylor  v.  Gorman.  4  Ir.  Eq.  .").")0;  Wilson  v.  Tucker,  3 
Starkie.  1.".4.  I)  )wi.  N.  P.  30;  Knifjhts  v.  Qu.nies.  4  Moore.  .k^'J;  Allen  v. 
Clark,  7  Law  T.  (N.  S.»  7S1.  1  X.  K.  3.">S;  Diax  v.  StriHjpe.  2  Barn.  &  Adol. 
.■.SI;  Stannard  v.  rilithorae.  10  Ring.  4J)1;  Ires<,n  v.  Pearniau.  .">  Dowl.  v^:  K. 
*\s-:  Howell  V.  Young.  ."  H.nn.  &  ('.  2.".0;  Whitehead  v.  (Jreethaiu.  2  King. 
4<"rt.  lit  Moore,  is:?;  Dartnali  v.  lIow;ird.  4  Barn.  iS:  C.  34.">;  Bruuibridge  v. 
Masscy.  2S  Law  J.  Exch.  .V.t;  ("o<)i)cr  v.  Stephensnii.  •_'!  L;iw  .1.  Q.  B.  202; 
Ilayne  v.  Khode.s,  8  Q.  B.  342.  10  .lur.  71.  1.".  Law  .T.  Q.  B.  IM. 
1S3  Whart.  Ag.  §  001;    (JtHlefnty  v.   It.ili.m.  (!  Bing.  4(58. 

12*  Wilkinson  v.  (Jriswold,  12  Suiedes  &  ^L  (Miss.)  (iCO;  Poole  v.  Hist.  4 
McConl  (S.  ('.)  2.V,l;  Smyth  v.  Harvic.  .31  111.  ('.2;  Livingston  v.  f:<>x,  i!  Pa. 
St.  ."'.Co;  McEarland  v.  Crary,  S  Cow.  (\.  Y.)  2.'..!;  W.irner  v.  (Jriswold.  8 
Wrnd.  (N.  Y.)  <;(>'». 

>2'  W:dker  v.  Stevtiis.  7!i  111.  lO.".;  IMoyd  v.  .Nanglc.  3  Alk.  ."iiVS;  Birkheck 
V.   StafTnr.l.   14  AM..   Pnir.  (.\.   Y.i  2S.-,. 


§    9)  LIAnil.ITY    TO    THIRD    TERSdNS.  23 


SAME— LIABILITY  FOR  BREACH  OF  CONTRACT  —  EXCEED- 
ING AUTHORITY. 

8.  An  attorney  is  liable  for  breach  of  the  contract  of  em- 

ployment. 

An  attornoy  is,  of  courso,  linblo  for  damasos  rosnltin^^  from  his 
breacli  of  the  contract  of  (Miiployinent.  He  impliedly  contracts  to 
obey  instructions/-*^  and  not  to  exceed  his  authority.^ -^  lie  is  lia- 
ble for  default  in  either  respect. 

SAME— LIABILITY  TO  THIRD  PERSONS. 

9.  An  attorney  is  not   liable   to   third,   persons   for  breach 

of  duty  o"wing  to  his  client  alone;  but,  -where  his 
conduct  violates  a  duty  o-wed  to  third  persons, 
gro-wing  out  of  his  personal  contract  or  imposed 
by  law,  he  is  so  liable. 

Liability  in  Contract. 

For  breach  of  duty  imposed  upon  him  merely  by  virtue  of  his 
retainer,  an  attorney  is  liable  to  his  client  alone,  for  to  him  alone 
the  duty  is  owing.^-**  But  for  breach  of  a  duty  imposed  upon  him 
by  law,  as  a  responsible  individual,  in  common  with  all  other  mem- 
bers of  society,  he  is  liable  to  any  one  harmed  by  the  breach.^-* 
Thus,  for  nejjligence  in  the  examination  of  title,  an  attorney  is  liable 
only  to  the  person  by  whom  he  was  employed,  and  not  to  a  third 
person  who  relied  on  the  attorney's  certificate  to  his  injury.^^"  An 
attorney,  however,  like  other  ajjents,  may  assume  a  duty  towards 

126  Where  he  fails  to  bring  an  action  immediately  as  directed,  he  is  liable 
for  consequent  damage  to  his  client.  People  v.  Cole,  Si  111.  327;  Gilbert  v. 
Williams,  8  Mass.  51;    Cox  v.  Livingston,  2  Watts  &  S.  (Pa.)  10.3. 

127  Attorney  is  liable  for  iinauthorizod  appearance  whereby  assiuned  client 
is  damaged.     O'Hara  v.  Bropliy.  24  How.  Prac.  (X.  Y.)  37'.>. 

128  National  Sav.  Bank  of  District  of  Columbia  v.  Ward,  100  U.  S.  195; 
Dundee  Mortg.  &  Trust  Inv.  Co.  v.  Iluglies.  20  Fed.  39. 

129  Mechem,  Ag.  §  572. 

130  See  cases  cited  in  note  128,  supra. 


24  ATTORNKY    AND    CI.IKNT.  (§    9 

lliiril  persons,  ;is  wlicic  lie  ((uiti-icts  jJiTsonnlly  with  them,  niiil  in 
such  cases  is  liable  accordingly.'"  An  attorney  is  usually  held 
pt  rsonally  liable  for  clcik's  and  sherilT's  fees  for  issuing,  tiling,  and 
stTvinu'  writs  and  otlu-i'  jiaiiris.'  •-  This  Is  on  ihc  liround  "Ihat  an 
altorncy  jtlacini;  a  writ  in  an  olhcei-'s  hands  for  service  is  to  be  re- 
garded as  personally  request in<i  the  service,  and  as  personally  liable 
for  it,  unless  he  expressly  informs  him  Iliat  he  will  not  be  personally 
liable,  or  there  are  circumstances  which  make  it  clear  that  that 
was  the  understandinj;-  of  the  ]>arties."  ^■■■'  In  this  view  of  the  case, 
the  ruh*  is  no  dei»arture  from  the  general  law  of  agency,  and  is  sup- 
jiorted  by  the  additional  argument  of  convenience.  The  rule,  how- 
«ver,  has  not  been  universally  followed.  In  Michigan  it  has  been 
held  that  an  attorney  is  liable  for  such  fees  only  upon  proof  of  his 
express  promise  to  pay  them,  or  of  some  practice  or  course  of  deal- 
ing between  him  and  the  clerk  from  which  such  personal  promise 
can  be  implied.^''*     The  rule  is  the  same  in  Vermont.^''^ 

Attorneys  are  liable  for  torts  on  the  same  principles  that  other 
]»ersons  are.^"°  Thus,  attorneys  may  be  liable  for  malicious  prose- 
cution, where  llic  malice  is  their  own,  and  they  have  no  probable 
cause.  Hut  it  may  be  that  evidence  which  wotdd  show  a  want  of 
probable  cause  for  the  client  would  not  establish  the  same  thing 
as  to  the  attorney.^ ^^  Where  an  attorney  acts  in  good  faith,  he  is 
not  liable,  though  the  action  on  his  client's  part  was  malicious  and 
without  ]nobable  cause.' ^'^     An  attorn(\v  may  rely  on  the  facts  stat- 

131  He  is  liable  for  clerk'.s  and  sherifT's  fees  when  he  promises  to  pay  them. 
Wires  v.  Brijrgs.  ~i  Vt.  101;    Trestou  v.  Prestou,  1  Doug.  (Mich.)  2!)2. 

132  ranip))ell  V.  Cothran,  iJO  N.  Y.  279;  Adams  v.  Iloplcins.  5  .lohus.  (N. 
Y.)  2.7J;  Ousterhout  v.  Day,  9  .Tohus.  (N.  Y.)  114;  Watcrtowu  v.  Coweu,  5 
Paigf  (X.  Y.)  .jlo;  Heath  v.  Bates,  4!)  Conu.  342;  Tiltou  v.  Wright,  74  Me. 
214. 

i-t3  Hcatli  v.  Bates.  4!)  0)nn.  :{42. 

I'i*  Preston  v.  Preston,  1  Doug.  (Mich.)  21)2. 

13.-.  Wires  v.  Briggs,  .">  Vt.  KU. 

1-0  Attorneys  are  lialilc  for  rraud  or  cdilusion,  and  cannot  inj\ii-e  a  tliird 
jHTson  without  liability.  Such  conduct  violates  a  ritilit  in  rem.  .National 
Sav.  I'.ank  of  District  of  Toliunhia  v.  Ward,  KM)  V.  S.  19."). 

1  ^  I'.urnai)  v.   Marsii.    i:;   III.  :..;.'.;     l.ynch   v.   Com.,   1(1  Scrg.  ^v;:    U.  (Pa.)  :5(J8; 

i'.-<-k  V.  choin.;!!!,  '.ti  .Mo.  i:!'.),  :;  s.  w.  .")77. 

■  I'lH  StockJi-y    V.    liornidge,   H  C.ir.   A:    P.    11;    Hunt    v.   Priiitup,   2S   Ca.  297. 
.\i)il  see  cas«'S  cited  suiira,  note  i;;7. 


§    11)  COMPENSATION.  25 

t'(l  ))y  liis  client.'''"  As  in  trespass  liability  is  wholly  independent 
of  motive,  an  alloniey,  even  tlionj^^h  actin<^  in  f^ood  faith,  is  liable 
if  he  participates  in  a  trespass.  Thus,  an  attorney  who  directs  the 
execution  of  a  void  writ  is  liable  in  trespass  to  the  person  injuicd.''" 
The  client  and  ollicer  are  also  liable.^*^  They  are  joint  tresi>assers. 
The  attorney  and  client  are  not  liable,  however,  even  thouf^h  the 
writ  is  void,  where  the  officer  exceeds  the  command  of  the  writ,'*- 
unless  they  individually  i):irti(i])ate  in,  direct,  or  ratify  the  act 
which  constitutes  the  trespass.^^-'  Where  an  attorney  assunu's  to 
act  wholly  without  authority,  he  is  liable  to  any  one  damaged  by 
his  unauthorized  act.^** 

SAME— REIMBURSEMENT  AND  INDEMNITY. 

10.  An  attorney  is  entitled  to  reimbursement  and  indem- 

nity from  his  client. 

A  client  must  reimburse  his  attorney  for  all  reasonable  expenses 
advanced  in  the  course  of  litigation,  and  indemnify  him  against  lia- 
bilities incurred. ' '  ^ 

SAME— COMPENSATION. 

11.  An  attorney  is  entitled  to   compensation   for  his  serv- 

ices.    This  is  determined  either — 

(a)  By  contract,  or 

(b)  By  quantum  meruit. 

120  Burnap  v.  Marsh,  13  111.  5.3.");  Peck  v.  Chouteau  91  Mo.  1.39,  3  S.  W. 
577. 

Ko  Burnap  v.  Marsh,  13  111.  535;  Cook  v.  Hopper,  23  Mich.  511.  But 
see  Koss  v.  Griffin,  53  Mich.  5,  IS  N.  W.  534  (judicial  privilege). 

141  Newberry  v.  Lee.  3  Hill  (N.  Y.)  525;  Foster  v.  Wiley,  27  Mich.  244; 
Bates   V.   Pilling.  G   Barn.   &  C.   38. 

14  2  Averill  v.  Williams,  1  Denio  (N.  Y.)  501;  Adams  v.  Freeman,  9  .Johns. 
(N.  Y.)  118;    Ford  v.  Williams,  13  N.  Y.  577,  24  N.  Y.  359. 

143  Cook  V.  Hopper,  23  Mich.  511;  Hardy  v.  Keeler.  56  III.  1.52;  Welsh  v. 
€ochran,  63  N.  Y.  181;  Averill  v.  Williams,  4  Denio  (N.  Y.)  295.  See,  also, 
Yanderbilt  v.  Turnpike  Co.,  2  N.  Y.  479. 

144  Burnap  v.  Marsh,  13  111.  535. 

145  Clark  V.  Randall,  9  Wis.  135;    Campion  v.  King,  6  Jur.  35. 


ATTORN KY    AND    CMKNT. 


C§    11 


Ailoriirvs  ;ir('  itriiMM  f;i«i<'  ciiiitl.'d  lo  .•oiii|M'iis;iti<>n  for  llicir  scrv- 
irrs.  and  iiiav  iiiaintain  an  anion  iliorrfor.'"'  unless  (lu-y  have 
spicially  aun-rd  lo  st-rvc  «:iat  nitoiisly,  and  llio  Imrdrn  of  showini; 
sn(  h  si.c<-ial  a-romirnl  is  on  iln-  .li.iil.""  'I'lw  riulii  to  <'oniiM-nsa- 
linn  ami  iis  oxlfiil  is  dott-i mined  \>\  the  contiacl  when  tiiere  is 
one.'*-  Wh.re  there  is  no  contract  on  tiie  sultject,  tiie  attoiney 
may  recover  on  a  <inantum  niefnit."''  The  paities  may  make  such 
contracts  as  they  iijease,  proviiie.l  they  are  fairly  entered  into  and 
are  neithei-  extortionalc  nor  chamiK-iions.'"'  ('(.mitensjition  may 
be  made  conlin^'enl  on  success,  or  jdopoi-iioned  lo  the  amount  of 
recovery. ^^'  The  cases  are  not  wholly  a-reed  as  to  whai  contracts 
are  chamj)eiions.  The  nioch-rn  tendency  is  certainly  aj^ainst  the 
old  strictness.  It  is  ;ienerally.  luil  not  universally,  held  that  a  con 
iiacl  whereby  the  attorney  is  t<.  receive  a  part  of  the  thin};  recovered 
as  his  compensation  is  not  champertoiis.  unh'ss  the  attoi-ney  also 
a;:rees  to  pay  the  expi-nses  of  lit  i.-ation.' '-      It  is  in  all  cases  esseu- 

n«  Wylie  v.  C<ixo.  1.".  II«.\v.  41.".;  Stnnl.m  v.  Enit>r('y.  !>:',  V .  S.  ."IS;  Bracki'tt 
V.  Scars.  1.1  Mich.  L'44;  K^'glcston  v.  Hoardman,  ;}7  Mich.  14;  Sinitii  v.  Davis. 
4.".  N.  II.  ."»<;(;;  Nichols  v.  Scott,  12  Vt.  47;  "Webb  v.  Rrowniiii:.  14  Mo.  or.4 ; 
Ilarlaii.l  v.  Lillcnthal.  .":?  N.  Y.  438;  Halsbauj:li  v.  Fra/.cr.  1!)  I'a.  St.  S>r>.  Cf. 
S.H'lcy  v.  Craue,  15  N.  J.  Law.  3.j;  Law  v.  Kwcll.  l*  Cnincli,  ('.  C.  144.  Fed. 
(■a.<.  No.  8.127;  Mowat  v.  Brown.  19  Fed.  87.  And  see  Hasscll  v.  V.m  Ilouten. 
V,'J  N.  J.  Kq.  105;    Bnulcenrid>,'e  v.  McFarland,  Add.  40. 

14T  Brady  v.  Mayor,  1  Saudf.  nc/J;    Webb  v.  Brownin;:,   14   Mo.  ;5.".4. 
14*.  Moses  v.  Bagley,  55  Ga.  283;    Badjier  v.  (Jallaher,  113  111.  tiC/J;    Ilitoh- 
in^rs  v.  Van  Brunt.  38  N.  Y.  .T'..".;    Tai>ley  v.  Cottiii.  12  <;ray.  42o:    Stanton  v. 
Enibrey,   !t3   1".    S.   54S. 

MO  Kjrirleston  v.  Bo.'inlni.in.  :\1  Mi<h.  14;  Town  of  Bnice  v.  Dickey.  1H>  111. 
527.  «!  N.  K.  43.".;  ('anijiltell  v.  Cod.lanl.  17  111.  .Vpli.  ."'.N-".;  I'eople  v.  Bond 
Street  Sav.  Baidv.  lo  Abb.  N.  (".  1.".;  Stanton  v.  Ilnibrey.  I».3  W  S.  ."..".7;  Siiiitii 
V.  Kailroad  Co..  Co  Iowa.  51."..  15  N.  W.  2ttl;  Mnndy  v.  Stroii;:  (N.  .1.  Kir.  A: 
App.i  31  .\tl.  t;il.  In  New  York  C(»sts  belonj;  to  attorn. -y.  tluiiano  v.  Wliiie- 
nack  (Com.  PI.)  30  N.  Y.  Suitp.  415. 

1  •••>  Wri;:lit  v.  Tebbits.  ;il  t  .  S.  2."2:  'I'Mylor  v.  Bfiiiiss,  llo  1.  S.  12.  :v 
Suii.  Cl.  441;    I'.oardnian  v.  Thi'mpson.  2.".   In\v:i.    is'.i. 

i-i  Duke  V.  Hari.er,  (iC  .Mo.  51;  .Mlard  v.  Laiiiiniii.b'.  2'.i  Wis.  .".nj;  Kusicrcr 
V.  City  of  Beaver  Dam.  5(;  Wis.  471.  14  N.  W.  f.l7;  Sianton  v.  Hmbrey.  !»3 
U.  S.  MH;  Taylor  v.  Bend.ss.  110  V.  S.  42.  3  Snp.  Ct.  4tl:  Wylle  v.  C.txe. 
15  How.  415;  I'.riT  v.  DicUen.  105  Fa.  St.  S3;  Dale  v.  Ki.  Ii.nds.  I'l  D.  C.  312. 
Jf-iDuke  V.  ll:iriM'r.  CC  Mo.  .",1;  (%/|enian  v.  Billings.  S'.i  111.  is.;;  Martin  v. 
Clarke,  8  It.   I.  I'.s'j;    Alhird   v.   I.aniiriiiid.'.  2".i  Wis.  .".nj:     Ma.kns   v.   Myron.  4 


§    11)  COMPENSATION.  27 

tin!,  to  constitute  C'liiinipcrty,  iIkiI  Hktc  he  :iii  jij^m-i-ciikiiI  for  a  por- 
li(»ii  of  the  very  thiiij^  recovered.  Jf  there  is  no  such  a^nccMicnl,  but 
the  attorney's  compensation  is  to  be  a  personal  liability  of  the 
client,  though  i»roi)ortion<'(l  to  the  amount  of  recovery,  the  a^i'ee- 
ment  is  not  champertous.  It  is  iiiiiiiatciial  tliat  the  avails  of  the 
suit  were  tlie  means  or  tlie  security  on  which  the  attorney  lelied  for 
payment,  if  it  was  to  be  payment  of  a  debt  (bn;  from  the  client.'"'^ 
Unless  the  stipulation  for  a  eontinf,a'nt  fee  amounts  to  an  assi;;n  men  t, 
and  the  opposite  party  has  notice  of  it,  the  client  may  make  a  bind- 
inj?  settlement  of  the  suit  in  disrejj;ard  of  the  attorney's  claims.' '•* 
Notice  will  not  alter  the  rule  unless  the  claim  was  le},'ally  assign- 
ahle.^'^^  A  cause  of  action  for  a  personal  tort  is  not  assignable.' =*' 
r.ut,  althou<;h  the  settlement  of  the  case  may  be  binding,  the  client 
will  be  liable  for  breach  of  contract  to  the  attorney.'^'  The  attorney 
may  recover  at  least  the  reasonable  value  of  his  services.' ^^  Where 
there  is  no  special  contract  respecting  compensation,  an  attorney 
may  recover  the  reasonable  value  of  his  services.'^*  It  is,  of  course, 
necessary  to  show  a  retainer.""'  Where  the  attorney  w'as  retained 
by  another  party,  the  mere  fact  that  his  services  were  beneficial  to 
defendant  is  iusuflicient  to  show  liability."''     In   lixiiig  ilie  value 

Mich.  53");  Ware's  Adin'r  v.  Russoll,  70  Ala.  174;  Ihurston  v.  rcrcival,  1 
rick.  (Mass.)  415;  Lathroi)  v.  Amherst  Baulv.  t)  Meto.  (Mass.)  4S9;  Smith  v. 
Davis,  45  N.  H.  5GG;  Davis  v.  Sharron,  15  B.  Mou.  (Ky.)  CA;  Boardman  v. 
Thompson,  25  Iowa,  489.  In  Massachusetts  an  agreement  to  look  solely  to 
the  fund  for  compensation  without  any  personal  liability  on  the  part  of  the 
client  is  held  to  be  champertous.  Blaisdell  v.  Ahern.  144  Mass.  393,  11  X.  E. 
f»l. 

153  Blaisdell  v.  Ahern,  144  Mass.  393.  11  X.  E.  G81. 

184  Coghlin  V.  Railroad  Co.,  71  N.  Y.  442;  Pulver  v.  Harris,  i\2  Barb.  500. 
52  N.  Y.  73;  Quiucey  v.  Francis,  5  Abb.  N.  C.  2S(>;  Lamont  v.  Wasliiu;i,nou, 
etc.,  R.  Co.,  2  Mackey,  502;    Miller  v.  Newell,  20  S.  C.  122. 

155  Kusterer  v.  City  of  Beaver  Dam,  50  Wis.  471,  14  .\.  W.  t;i7. 

156  Id. 

157  Kersey  v.  Gartou,  77   Mo.  G45;    Polsley  v.  Anderson,  7  W.   Va.  2o2. 

158  Quint  V.  Mining  Co.,  4  Xev.  305. 

159  See  cases  cited  in  note  149,  ante;    In  re  Sherwood,  3  Beav.  338. 

160  Weeks,  Attj's.  at  Law,  §§  338,  339;  Cochran  v.  Newton,  5  Denio  (N.  Y.) 
482;  Chicago,  St.  C.  &  M.  R.  Co.  v.  Lamed.  20  111.  218;  Turner  v.  Myers,  23 
Iowa.  391. 

101  Chicago,   St.  C.  cV  M.   R.  Co.  v.  La  rued,  2tJ  111.  218;    Turner  v.   Myers, 


28  ATTORNEY    AND    Cl.IKNT.  (§11 

of  an  attorney's  sorvicos,  liis  professional  skill  and  standing;,  his 
(  xperieuce.  the  nature  aiul  eliaraeter  of  the  (piestions  raised  in  tlu' 
rase,  the  amonnts  involved,  and  the  result  must  all  be  considered. '"- 
\\ant  of  snecess.  however,  is  no  defense,  in  the  absence  of  a  special 
contract  making  compensation  conlinj^M-nt  on  success.'"''  The  client 
may  recoup  damaji«'S  for  ne}ili<;ence  or  bad  faith  on  the  part  of  the 
attorney.'"*  Where  an  attorney  refus<'s  to  ])ay  over  money  collect- 
ed for  his  client,  and  the  client  is  compelled  to  brinji  an  action 
airainst  him  for  the  amount  collected,  the  attorney  forfeits  any  fees 
that  may  have  been  a<;reed  npon  for  his  services.'"^  An  attorney, 
retained  «ienerally  to  conduct  a'  le^al  proceeding,  enters  into  an 
entire  contract  to  conduct  the  proceeding  to  its  termination.  If  an 
attorney  without  just  cause  abandons  his  client  before  the  procei'd- 
inj;  for  which  he  was  retained  has  been  conducted  to  its  termination, 
he  forfeits  all  right  to  payment  for  any  services  which  he  has  ren- 
dered. The  contract  being  entire,  he  must  i)erform  it  entirely,  in 
order  to  earn  his  comjtensation,  and  he  is  in  the  same  position  as 
any  }ierson  who  is  enj^aged  in  rendering  an  entire  service,  who 
must  show  full  performance  before  he  can  recover  the  stipulated 
comi)ensation.'°*'     The  rule  is  the  same  where  the  attorney  is  dis- 

2,3  Iowa,  391;  Ex  parte  Lynch,  25  S.  C.  193;  Saving's  Rank  v.  Benton,  2  Mete. 
(Ky.>  240. 

162  EjrjJTleston  v.  Bonrdmau,  37  Mich.  14;  riielps  v.  Hunt,  40  Conn.  97; 
Kohbins  v.  Harvey,  5  Conn.  335;  Harland  v.  Lilienthal,  53  N.  Y.  438;  Selover 
v.  Bryant.  .54  Minn.  4,34,  56  N.  W.  58;  Friuk  v.  MoCoinl).  00  Fetl.  480.  The 
wcaltli  of  a  client  cannot  be  considered.  Stevens  v.  Ellswortli  (Iowa)  (53  N. 
W.  ON.-!. 

i'^a  Brackett  v.  Sears,  15  Mich.  244;  Rush  v.  ("aveuauKh,  2  Pa.  St.  187; 
Bills  v.  Polk,  4  Lea  (Tenn.)  494.  Disregard  of  instructions  is  a  defense, 
o'llalloran  v.  Marshall.  8  Ind.  App.  .394.  .35  N.  E.  920 

i<;4  Cliatlicld  v.  Sinionson.  92  N.  Y.  209;  Iloppin.ir  v.  Quin.  12  Wend.  (\.  Y.) 
517;  Caverly  v.  McOwen,  123  Mass.  .574;  Nixon  v.  Phelps.  29  Vt.  19S; 
Pearson  v.  l)arrin;,'ton.  32  Ala.  227.  AViicrc  an  attorney  adviseil  liis  client 
in  an  action  against  a  nf)nresident  tiiat  service  by  publication  was  ltooi], 
and  a  valifl  judgment  could  l)e  olttaineil,  su"li  attorney  «innot  recover  for 
-Tvices  rendered  therein.     Hinckley  v.  Krug  (Cal.)  ;{4  Pai-.  IIS. 

1  us  Large  v.  Coyle  (Pa.  Sup.t  12  .\tl.  34:5;  (Jray  v.  Conyers.  70  (Ja.  .349; 
Wills  V.  Kane,  2  Crant,  Cas.  00. 

"•"TerMicy  v.  lierger,  93  N.  Y.  524.  529:  JOiini  v.  I.autnn.  7  .Mim,  274; 
Davis  V.  Snnth,  48  VI.  .54.    Bui  see  Brilton  v.  Turner,  0  \.  II.  481. 


§11)  COMPENSATION.  29 

charged  by  liis  client  for  cans-e/"  AMiere,  however,  the  attorney  has 
sufficient  cause  for  abandduing-  the  (Mni)b)ynient,  he  may  always 
recover  on  a  quantum  meruit;  ^"^  and  it  has  been  held,  that  when 
the  services  were  rendered  under  a  contract  fixing  the  amount  of 
compensation,  he  could  recover  the  stipulated  sum.^'''"  What 
shall  be  a  sufficient  cause  to  justify  an  attorney  in  abandoning  a 
case  in  which  he  has  been  retained  has  not  been  laid  down  in  any 
general  rule,  and  cannot  be.  If  the  client  refuses  to  advance  money 
to  pay  the  expenses  of  the  litigation,  or  if  he  unreasonably  refuses 
to  advance  money  during  the  progress  of  a  long  litigation,  to  his 
attorney,  to  apply  upon  his  compensation,  sufficient  cause  may  thus 
be  furnished  to  justify  the  attorney  in  withdrawing  from  the  serv- 
ice of  his  client.  So  any  conduct  on  the  part  of  the  client,  during 
the  progress  of  the  litigation,  which  would  tend  to  degrade  or 
humiliate  the  attorney,  such  as  attempting  to  sustain  his  case  by  the 
subornation  of  witnesses  or  other  unjustifiable  means,  would  fur- 
nish sufficient  cause.' ^'^  The  employment  by  the  client,  without 
consent  of  or  consultation  with  the  attorney,  of  counsel  with  whom 
the  attorney  has  personal  and  professional  objections  to  being  as- 
sociated is  suflficient  cause.^"  The  client,  unless  he  has  bound 
liimself  to  employ  the  attorney  for  a  stated  period,  may  disclmrge 
him  at  any  time,  with  or  without  cause.^^^  If  It  is  without  cause, 
the  attorney  may  recover  the  reasonable  value  of  his  services.'"^ 
If  tlie  discharge  is  a  breach  of  a  contract  to  employ  the  attorney 

167  Walsh  V.  Shumway,  05  111.  471. 

168  Tenney  v.  Berger.  93  N.  Y.  524;  Eliot  v.  Lawton,  7  Allen.  274.  And 
see  Whitner  v.  Sullivan  (S.  C.)  2  S.  E.  391. 

169  Polsley  V.  Anderson,  7  W.  Ya.  202;  Baldwin  v.  Bennett,  4  Cal.  392; 
Kersey  v.  Garton,  77  Mo.  (545. 

ivo  Tenney  v.  Berger,  93  N.  Y.  530. 
iTi  Id. 

172  Tenney  v.  Berger.  93  N.  Y.  524;  Trust  v.  Repoor,  15  How.  Prae.  570; 
In  re  Prospect  Ave.  (Sup.)  32  N.  Y.  Supp.  1013.  But  the  court  will  not  per- 
mit a.  substitution  until  the  attorney's  fees  and  charges  are  first  secured. 
Ogden  V.  Devlin,  45  N.  Y.  Super.  Ct.  G31;  Board  of  Sup'rs  of  Ulster  Co.  t. 
Brodhead,  44  How.  Prac.  411. 

173  Tenney  v.  Berger,  93  N.  Y.  524;  Ogden  v.  Devlin,  45  X.  Y.  Super  Ct. 
631. 


oO  ATTOKXKY    AND    CLIENT.  (§i^    12-13 

foe  ;i  (Idinilc  tiinc,  lie  may  i-ccoNcr  daniajics  for  such  breach/'*  If 
the  (liscliarjic  is  for  cause,  as  has  been  seen,  the  attoi'ney  forfeits 
all  rij::ht  to  conipiMisation.  Unfaithfulness,  want  of  diligence  and 
ykill,  and  the  like  w  ill  justify  a  disehai'ge. 

SAME— ATTORNEYS'  LIENS. 

12.  An   attorney   has    a   lien   to    secure   his   charges.     At- 

torneys' liens  are  of  two  kinds: 

(a)  The  general,  or  retaining,  lien;  and 

(b)  The  special,  or  charging,  lien. 

13.  RETAINING  LIEN— An  attorney's  general  or  retain- 

ing lien  is  a  right  on  the  part  of  an  attorney  to  re- 
tain all  property  of  his  client  that  conies  into  his 
possession  in  the  course  of  his  professional  employ- 
ment until  all  his  costs  and  charges  against  his 
client  are  paid.'" 

An  attorney's  general  lien  is  a  common-law  lien,^'*'  and,  like  other 
coniniou-law  liens,  it  is  founded  on  possession.  It  is  a  mere  right 
to  retain  i)Ossession,^'"  It  cannot  be  enforced  by  sale,  or  by  any 
j)roceediny;  in  law  or  equity.^'®  It  is  a  mere  ri<;ht  to  embarrass  the 
(lient  by  withholding  possession.^ ^"     IJut  the  lien  continues  until 

I'^Polslej'  V.  Anderson,  7  \y.  Va.  iJOli;  Baldwin  v.  Bennett,  4  Gal.  302; 
-Myers  v.  Crr  "  ?tt,  14  Tex.  257;    McElhiuney  v.  Kline,  G  Mo.  App.  94. 

i'5  Jones,  i      is,  §  113. 

1T6  In  some  states  this  lien  Is  declared  by  statute.  Gen.  Laws  Colo.  1877, 
§  32;  Gen.  St.  Colo.  1883,  §  85;  McClain's  Oode  Iowa  1888,  §  293;  Rev.  Codes 
Dak.  1877,  §§  9,  10;  Code  Ga.  1882,  §  1989;  Comp.  Laws  Kan.  1879,  p.  114. 
§§  4^^)8,  4G9;  Gen.  St.  Ky.  1883,  p.  149,  §  15;  Gen.  St.  Minn.  1894,  §  G194;  Hill's 
Ann.  Laws  Or.  1<S92,  §  1044;  Rev.  St.  Mont.  1879,  ]>.  414,  c.  3,  §  54;  Comp. 
St.  Neb.  1881,  c.  7,  §  8;   Rev.  St.  Wyo.  1887,  §  138. 

177  In  re  Wilson.  12  Fed.  237;  IIcslop  v.  Metcalfe.  3  Mylne  &  C.  183: 
BoYAin  V.  BoUand,  4  Mylne  &  C.  354;    Colc^rave  v.  Manley,  Turn.  &  R.  400. 

1 78  Jones,  Liens,  §  132;  In  re  Wilson,  12  Fed.  235;  Brown  v.  Bifjley,  3 
Tcnu.  Ch.  G18;  Thames  Iron  Works  Co.  v.  Patent  Derrick  Co.,  1  Johns.  «& 
II.  tC!;  Ileslot  v.  Metcalfe,  3  Mylne  &  C.  183;  Bozon  v.  Bolland,  4  Mylne  & 
c.  :'..")4. 

178  West  of  EnKliiiul  Bank  v.  Bjitciiclor,  7>\  Law  J.  Cli.  190.  See,  also, 
•loiifs.  Lit-ns,  g  lf)2.     In  l)<jane  v.  Knsscll.  ;!  (;ray   (.Mass.)  3S2.   CJiiof  Justice 


§§    12-18)  attorneys'  EETAINING    LIEX.  31 

the  debt  scfured  is  paid,^^"  even  ilioiif^li  tlic  d(']»t  is  barred  by  the 
statute  of  limitations.''''  This  lieu  is  a  {-eiieral,  us  disliii<;nishe(l 
from  a  special,  lieii.^**-  That  is  to  say,  it  covers  a  general  balance 
due  the  attorney  from  his  client,  and  is  not  confined  to  charges  due 
in  the  special  matter  in  relation  to  which  the  property  was  receiv- 
ed.^*' But  it  does  not  cover  collateral  debts  not  due  the  attorney 
in  his  character  of  attorney.^**     This  general  lien  exists  only  in 

Shaw  says:  "If  it  ho  snid  that  a  right  to  retain  Iho  goods,  without  the 
right  to  sell,  is  of  little  or  uo  value,  it  may  be  answered  that  it  is  certainly 
not  so  adequate  a  security  as  a  pledge  with  a  power  of  sale;  still,  it  is  to 
be 'considered  that  both  parties  liave  rights  whi-.h  are  to  be  regarded  by 
the  law,  and  the  rule  must  be  adapted  to  general  convenience.  In  the 
greater  number  of  cases,  the  lien  for  work  is  small  in  comparison  with  the 
value  to  the  owner  of  the  article  subject  to  lien,  and  in  most  cases  it 
would  be  for  the  interest  of  the  owner  to  satisfy  the  lien  and  redeem  the  goods, 
as  in  the  case  of  the  tailor,  the  coach  maker,  the  innkeeper,  the  carrier,  and 
others;  whereas,  many  times,  it  would  cause  great  loss  to  the  general  owner 
to  sell  the  suit  of  clothes  or  other  articles  of  personal  property.  But,  fur- 
ther, it  is  to  be  considered  that  the  security  of  this  lien,  such  as  it  is,  is  su- 
peradded to  the  holder's  right  to  recover  for  his  services  by  action." 

180  Young  V.  English,  7  Beav.  10;   Warburton  v.  Edge,  9  Sim.  508. 

181  Higgins  V.  Scott,  2  Barn.  &  Adol.  413;  In  re  Murray  (l.S(J7)  Wkly.  Notes, 
190. 

182  "A  general  lien  differs  essentially  from  a  particular  lien  in  this:  that, 
while  the  latter  is  a  right  Avhich  grows  out  of  expense  or  services  bestowed 
on  the  particular  property,  the  former  is  a  right  to  retain  certain  property  of 
another  on  account  of  a  general  balance  due  from  the  owner."  S"'  ouler,  Pers. 
I'rop.  §  382.  I 

183  Sanders  v.  Seelye,  128  111.  G31,  21  N.  E.  601:  In  re  Knapp,  85  N.  Y. 
284;  Bowling  Green  Sav.  Bank  of  City  of  New  York  v  Todd,  52  N.  Y".  489; 
Ward  V.  Craig,  87  N.  Y.  550;  Finance  Co.  of  Pennsylvania  v.  Charleston,  C. 
&  C.  R.  Co.,  40  Fed.  420;  McPherson  v.  Cox,  96  U.  S.  404;  In  re  Wilson.  12  Fed. 
235;  Howax-d  v.  Town  of  Osceola,  22  Wis.  453;  Chappell  v.  Cady,  10  Wis.  Ill; 
Stewart  v.  Flowers,  44  Miss.  513;  Weed  Sewing  Mach.  Co.  v.  Boutelle,  56  Vt. 
570;  Hurlbert  v.  Brigham.  Id.  368;  In  re  Paschal,  10  Wall.  4^3;  Ex  parte  Ster- 
ling, 10  Yes.  258.  A  lien  on  papers  for  professional  compeusation  does  not  exist 
in  Pennsylvania.  Du  Bois'  Appeal.  38  Pa.  St.  231;  Walton  v.  Dickerson,  7  Pa. 
St.  376.  A  lien  for  a  general  balance  has  been  denied.  McDonald  v.  Napier, 
14  Ga.  89;  Waters  v.  (irace,  23  Ark.  118;  Pope  v.  Armstrong,  3  Smedes  & 
M.   (Miss.)   214;    Cage  v.   Wilkinson.   Id.   223. 

184  \viiart.  Ag.  625.  It  covers  a  stipulated  fee  in  another  case.  Randolph 
V.  Randolph,  34  Tex.  181. 


32  ATTtHiNKY    ANO    CLIKNT.  (§§    12-13 

f;i\(>i'  of  ;it  Inni('\  s,' '  ■  lliniiL;li  nilicr  persons  iiinv  li;i\c  a  special  lien 
for  scr\icos  ii'iidori'd  on  tlu'  spi'iilic  projirrtv  on  which  Ihc  lien  is 
clainicil.'""'  Whcic  tlic  iiropoi'ly  is  received  hy  the  atloiney,  not 
in  his  professional  (ajiacily,  Imi,  f(tr  example,  as  I  inslee.' ■•'  oi-  inort- 
;;;ij;e(.'. '■'■''  ihe  lien  does  not  al  lach.'""''  'Die  lien  extends  to  papers/'"* 
money.""  and  [iroperty  '■'-  of  all  kinds,  lielonj^in;^  to  ihe  client  ;ind 
leceived  by  the  attorney  in  his  jivofessional  capacii\.  Where  the 
attorney  claims  a  li.ulit  to  letain  money,  it  is  a  dispnted  (pn-slion 
wheiluT  his  claim  resets  upon  the  law  of  lien  or  the  law  of  sel-olT.'""' 
The  liuht  to  retain  money  has  been  sai<l  to  be  a  riuht  to  defalcate 
r.itlur  than  a  li.uhl  of  lien."''*     >s'o  lien  arises  when  it  is  obvions  that 

>">•'•  A  rcal-cslMte  lirola  i-  li;is  no  licii  on  p:iiicis  in  liis  li:inils.  Arlinn'  v. 
Sylvfslcr.  luri  Pa.  St.  'SV.i.  Xor  an  anclioiiccr.  San.lcrson  v.  I'.i'll,  2  ('romp. 
.V  M.  .•:o4. 

1""^  IlolHs  V.  Claridjio.  4  Taunt.  NiT;    Santlcrson  v.  Hell.  2  Cronip.  A:  M.  :]04. 

18T  Kex  V.  Sankey,  (I  Nev.  iS:  M.  831);    Ex  parte  Ncwland.  4  Cli.  Div.  ol."). 

188  Telly  V.  Wathen,  7  Hare,  351,  18  Law  J.  Cli.  281. 

is»  Worrall  v.  .lohnson,  2  .lac.  &  W.  214,  21S;  San(l(>rs  v.  Seclye,  12S  111. 
r^l,  21  N.  E.  GUI;    Stevenson  v.  Blakeloek,  1  Maule  &  S.  "(35. 

i«o.st.  .Tolin  V.  Diefenilorf,  12  Wend.  (\.  Y.)  201;  Hooper  v.  Wdcli,  4:'.  Vt. 
If,!);  In  re  Knapp,  85  N.  Y.  284;  Bowiin^-Green  Sav.  Bank  of  City  of  New 
York  V.  Todd,  52  N.  Y.  489;  In  re  \Vilson,  12  Fed.  235;  ^Veed  Sewiu}?  Maeh. 
r'o.  V.  Boutelle.  5(5  Vt.  570;  Kedferu  v.  Sowerby.  1  Swanst.  84.  An  attorney 
has  no  lien  on  his  client's  will.  Balch  v.  Synies,  1  Turn.  &  R.  87.  Nor  to 
public  records  or  court  tiles.    Clifford  v.  Turrill.  2  De  Gex  &  S.  1. 

i-'i  DowlinK  V.  Eggemanu,  47  Mich.  171,  10  N.  W.  187;  Bowling-Green 
Sav.  Hank  of  City  of  New  York  v.  Todd,  52  N.  Y.  480-  In  re  Knapp,  85  N.  Y. 
2S4;  Ward  v.  Craig,  87  N.  Y.  550;  In  re  Tasclial,  10  Wall.  4.S5;  Lewis  v. 
Kincaly.  2  Mo.  App.  'X',;  Dielil  v.  Friester,  37  Ohio  St.  473;  Cooke  v.  Thresh- 
.T,  51  Conn.  I(t5;  Ca.sey  v.  March,  30  Tex.  180;  llnrll)urt  v.  Brighain,  5(i  Vt. 
3(W;  Head  v.  Bostick,  (5  Humph.  (Tenn.)  321;  Wells  v.  Hatch,  43  N.  II.  2t(); 
(  ninerod  v.  Tate,  1  East,  404.  Cf.  Lucas  v.  Canipbeh.  88  111.  447.  The  lien 
exists  for  a  stipulated  fee,  or  to  the  extent  of  quantum  meruit.  In  re 
Kna]ip,  85  N.  Y.  284.  Tln'  lien  does  not  atiadi  unlil  ilie  money  is  receivetl, 
and  nnist  not  l>e  confounded  with  tiie  allorney's  cliarging  lien.  See  i>ost, 
p.  :{.3;  Casey  v.  March,  30  Tex.  180;  St.  John  v.  Diefendorf.  12  Wend.  (N. 
V.I  2i;i.  I'ccs  of  associate  aitorneys  may  1k'  retained,  as  wed  as  liis  own. 
l',alsl.au;,'ii  v.  I'raxer,  III  I'a.  St.  tt5;    .Tackson  v.  Clopton.  00  Al.i.  20. 

''••-. \s    uipon   .•ii-tirics   (Iclivficd    to   bt    used    as   evidence    in    tlie  case.      l''ris- 
well  V.  King.  15  Sim.    lOt. 
11'^  Weils   V.    Hatcli.   4.'.    .\.    11.   24(i. 
i»«  I>u  r.ois"  .\|ipc;il,  ;:8  I'a.  St.  2.".1.     See,  also.  Baisl):iugli  v.   Frnzer,  10  Pa. 


§    14)  ATTOK.NKYS'  CllAUCJlN*;    i.ii;.\.  33 

the  pjii-tics  intended  lluit  (Ik  re  should  l»c  ii<»  lien,  and,  of  conrsr-,  the 
attorney  may  waive  il.  W'licic  the  contract  of  enipioynient  is 
inconsistent  with  the  existence  of  a  lien,  as  where  a  tej-in  of  credit 
is  pr<»\ided  for.'''"'  theic  is  im»  lien.  So  tlie  deliNciy  of  |tro|)erty  to 
an  attorney  for  a  special  pnrpose  is  inconsistent  with  the  existence 
of  a  lien.'"''  Continued  possession  is  essential  to  the  continued 
existence  of  the  lien.  "NA'here  tlie  attorney  voluntaiil.\  jiarts  witii 
possession,  the  lien  is  gone.^^^  Taking  other  security  operates  as 
a  waiver.^""  I'aynient  discharges  the  lien.  Taking  the  client's 
note  does  not,^""  unless  it  is  received  as  payment.^""  The  attor- 
ney's lien  takes  priority  over  all  claims  hy  or  under  the  client.-"* 

« 
14.   CHARGING  LIEN— An  attorney  has  an  equitable  lien 
upon  a  judgment  or  fund  in  court  realized  from  his 
exertions.     This  lien  is  called   a  charging  lien,  and 
is  a  special,  not  a  general,  lien. 

An  attorney's  cluuging  lien   must   not  be   confounded   with   the 
general  or  retaining  lien  just  explained.     The  retaining  lien  is  strict- 

St.  Of):    McKclvcy's  Appeal,   108  Ta.  St.   G15.     Id   Wells  v.   Hatch,   4:5  X.   II. 
246,,  it  was  called  a  right  of  set-off. 
193  See  Stoddard  Woolen  Manufactory'  Co.  v.  Huntley,  8  X.   II.  441. 

196  In  re  Larner.  20  Wkly.  Dig.  73;  Anderson  v.  Bosworth.  l.j  K.  I.  443. 
8  Atl.  339;  Batch  v.  Synies,  1  Turn.  &  It.  92;  Lawsou  v.  Dickenson,  8  Mod. 
300;  Ex  parte  Sterling,  Ki  Ves.  258.  But,  if  the  property  is  left  with  him 
after  the  special  purpose  is  accomplished,  the  lien  attaches.  Ex  parte 
remberton,  18  Ves.  282. 

197  In  re  Wilson,  12  Fed.  235;  Nichols  v.  Pool,  S!.'  111.  491;  Du  Bois'  Ap- 
l>eal.  38  Ta.  St.  231;  Oakes  v.  Moore,  24  Me.  214.  But  not  where  the  pos- 
session is  obtained  from  him  by  force  or  fraud.  Dicas  v.  Stockley,  7  Car.  &  P. 
587.  A  lien  is  lost  by  a  transfer.  In  re  Wilson,  12  Fed.  235;  Lovett  v. 
Brown,  40  N.  II.  511. 

19S  Balch  V.  Symes.  1  Turn.  &  K.  87;  Cowell  v.  Simpson,  16  Ves.  275;  Wat- 
son V.   Lyon.  7  De  Gex.   M.  &  G.  288. 

199  Bennett  v.  Cutis,  11  N.  H.  163. 

200  Cowell   V.   Simpson,   16   Ves.    275. 

201  Schwartz  v.  .Teuney,  21  Hun,  33;  Ward  v.  Craig.  87  N.  Y.  ,5.50;  Ex 
parte  Stei-liug.  It;  Ves.  258;  Weed  Sewing  Mach.  Co.  v.  Boutelle.  5(i  \t.  570; 
Randolph  v.  Randolph,  34  Tex.  181.  The  attorney's  possession  is  notice  of 
his  claim.  Hutchinson  v.  Howard,  15  Vt.  544;  Weed  Sewing  Mach.  Co.  v. 
Boutelle,  56  Vt.  570;  In  re  Wilson,  12  Fed.  235. 

ATTY.  &  CL.— 3 


;n  ATTt)UNKV    AM>    llIKNT. 


(§   14 


Iv   a  cuiniiioii  law    li<ii.  fniiii.l<  il  ii;m.ii  po.ssrHsion.     Mitri-nvrr.  il   is  a 
p-iM'i-al   lirii.   rxlnnliu^'   to  all    ili<-  alioru.'v'rt  proft'ssiniial   .har^ifs, 
atiil  not  limilrd  t(»  char^xcs  uiili  ivfci.-ncc  to  any  s|M(illc  pidprity. 
<  Ml   ill.-  uih.r  hand,  tin-  »liai,i:iM;i  li.ii  is  a  sprcial  li.n.  and   is  .(.ii 
linrd   lo  (osis  and   f.«s  dn.-  ihr  atloinr.\    in    iIm-   parti.idar  suit    in 
whi.li   111.-  jnd;:iii.-ni    is  [•.-.•.•wi-rd.-'"-     'riiis  li.ii   is  ii.»t    f.Min.l.-.l   on 
jioss.-ssion.       Tli.-r.-  .an  ]><■  n.»  piiss.-ssi..n  of  a  jiid-iii.  iil.      •Tin'  li.ii 
uhi.li  an  aiiorn.-y  is  sai.l  lo  lia\.-  on  a  Jiid-iiniil     -wlii.h  is.  pi-iliaps. 
an  inriirn-.  t   .-xjno.ssion— is  ni.-i.  ly  a   claim   to  tin*  .-.piiiahlc  ini.-r 
ft  i.-n»-t-  of  tin-  fonrt  to  liav.-  thai  jndjini.-nt  held  as  a  secnrity  for  his 
«l.hi."-''     -Alllnin-h  \v»-  talk  of  an  all.»ini-y  haxin^'  a  li.-n  npon  a 
jnd-inicnt.  it   is.  in  fa.l.  only  a  .laini  or  ri^dil   t(.^  uhU  for  ili.-  ini.-r 
N.-ntion  .»f  thf  conn  for  his  prol.-.iion.  wh.-n,  havin;;  oliiain.-.l  jml-,' 
ni.-nt  f.ir  his  clit-nt.  1m-  linds  th.-r.-  is  a  prohability  of  tin-  rli.-nrs  .1.- 
privin;.'  him   of  his  costs. "' -"^      In    many    slabs   iliis   lien    has   h.-.-n 
d.-.lar.-d  and   rc;;nlatt'<l   by  statute.      In   (►tlicrs  it    is  i-nforccd   indc 
|M  nd.-nily  of  statute,  and  in  sonic  it  docs  not  t-xist  at  all.      The  stat- 
utes vary  j,Meatly  in   th.-ir   provisions,  ami   the   de.  isions   are   cou- 
lliitin;,'.  owin^  lar.^ely  to  tin-  confnsion  .»f  tin-  two  kinds  of  lien.-"* 

-02  Williauis  V.  luKcrsoll.  Sit  N.  Y.  .'.(»S;  Wwd  ScwiuK  Much.  Co.  v.  BoutelU', 
.m;  Vt.  TiTn;  St.  Jobu  v.  IMcfcmlorf.  T_'  W.inl.  (N.  Y.i  lir.l ;  IMiillii.s  v.  Sta>:«. 
•J  Kdw.  Ch.  (N.  Y.)  lOS;  ^V^i^J:ht  v.  ("..l)l.'i^'li.  'Jl  N.  H.  XV.).  :M1:  M. -Williauis 
V  .I.-ukins.  72  .\la.  4sn;  r.>rlnisli  v.  Lc.iiianl.  S  .Miiui.  :'.ii:{  ((Jil.  li'lTt;  M'>s.'ly 
V.  Norman.  74  .Ma.  4*Jli:  In  rt'  ^Vllson,  Ili  Fcl.  'S\r>:  Hall  v.  I.avcr.  1  liar.'. 
.-.71;  Lucas  v.  r.-atock.  '.»  H.-av.  177;  Stcplicus  v.  Wcsmu.  ;{  Hani.  vV:  C.  o.\'t. 
au3  Barki-r  v.   St.  guiutiu,  12  .M.-.-s.  A:   W.  441. 

2«M  M,.r.-.T  V.  <;iavcs.  L.  K.  7  g.  1'..  4!i'.».  - -Lifu,'  pn.iMTly  s|M-:iklu;,'.  Is  a 
word  which  applies  only  to  a  chattel;  ilea  upon  a  ju.l^'iii. -uf  is  a  va;;uc  ami 
iiia«-cunit.'  e.xpresHlou;  au»'  the  words  'e.iuitabic  li.-n"  ar.'  iut.-iis.-ly  undi'- 
lin.'.l."  Itnnis.loii  v.  .Mlar.l,  L'  Kl.  ^  Kl.  1'.'.  •_'7.  Th.-  li.-u  nf  an  atturu.'y  up.)n 
a  jml^'iiient  is  an  e.iuitahle  li.-u.  .I..ues.  l.i.-lis.  S  l-V-.  It  is  iiui  ivc.^rniz.il 
by  (-omiiK.n  law,  but  only  in  t-.iulty,  unl*-ss  dc.-lan-.l  by  statute.  Forsythe  v. 
HeviTldKc.  r.2  111.  li«>S;  SlnnuouB  v.  Almy,  lo:{  Muss.  X\;  Hak.-r  v.  Took.  11 
.Mass.  Sir,:  ( Jet. -hell  v.  Clark.  .".  .Mass.  ;{on;  I'ott.-r  v.  May...  ::  .M.-.  .'.t:  Stone 
V.  Hyde,  '2'2  .Me.  .'US;  Ilobson  v.  Watson,  .'14  M.-.  'Jn;  I'atri.k  v.  l..-a.li.  '2  Me- 
Crary.  <w'..-..  I'J  Fed.  •".•".l;    In  re  Wils.iu.  lU  F.-d.  j:!'. 

206  The  lien  exIstK  In  H.>mp  f.irm  In  the  f..ll.iwliiu'  stales:  Alab.-ima:  War- 
li.ld  V.  (  ampt»ell.  :iM  Ala.  .V-'?;  .la.kson  v.  Cloptou.  r,i;  Ala.  -".•;  Cnitial  Kailr..ad 
\  llanklni;  Co.  v.  IVttus.  lilt  F.  S.  Iin.  .'.  Sup.  Ct.  :W7;  F.\  i.art."  l,.-liiuau.  Durr  .^: 
I-,,..  .Vt  .Ma.  <;.{1.  Arkansas:  .Mansf.  IHu.  1XS4,  SK  :M>:ir..  .'V.i.t'.i;  I.aii.-  v.  llallum. 
:'.s  Ark.  :'.sr>:    tJlst   v.   llanly.  :;:•.  Ark.  -SV.',.    C..1..i:m1..:     Mills'   Am.    St     is-.H.   « 


§    M)  ATTOHNKYs'  in  \u<;i.\(;    I.IKN.  3-5 

As  licl'drc  slalfd,  ;iii  ;i  I  loiiirv  "s  lii-n  ii|i(in  tin-  fiiiils  <»f  :i  siiil  in 
liinilcd  (o  (he  scr\iccs  rrmlcird  tlicr<-iii;  jiikI,  ;illli(»ii;;li  a  ihiiiiIhm-  of 
scpaialc  suils   iii\(ilvc  llic  saiiir  t|iH'sl  i(tri.  and  arc  ai<,Mir'd   ami   dc- 

t  en  Milled   t  n;4c  I  111  r.  I  lie  I'lllils  n\  (iln-  air  IKiI   Sllltjrcl    In  a  lii'H   for  scrv- 

•JIL';  . I. .1ms,, II  V.  M.Mill.iii,  l.'!  <"..I,i.  VIW.  L'J  l':i.\  7<;'.i:  I'illiiK.rc  v.  WclN,  10 
Colo.  21iS.  ir»  I'nc.  ."U:?.  ('(iiiiiccliciii:  Ainlnus  v.  Mdisc,  TJ  ( 'oiiii.  •H4;  Cooke 
V.  Thri'shcr.  ",1  Comi.  Ki.".;  I'.ciiJ.imiii  \.  i'.ciij:iiiiin,  17  Coiiii.  lln;  (Jii^^'cr  v. 
AViitsoii.  11  Ccniii.  li;s.  llDiid.i:  <',u-ici-  v.  l',<iiiii-l  I.  •;  ji.i.  :Ji|;  (•;iriiT  v. 
Davis.  S  Fla.  1JS2.  GooiKla:  Code  issii,  §  i;).s;»;  Morrison  v.  roinl<-r.  4.")  Cia. 
1(>7;  llawkius  v.  Loyh'ss.  .••.•»  Ca.  5;  (Jrecu  v.  Express  Co.,  :;'.»  Cu.  lio,  TwifrK!* 
V.  Chauihcrs.  r.C  (Ja  l'7!>:  I.itiU'  v.  Sexton.  S!>  (Jn.  411.  1.".  S.  i;.  lim.  Iiidinna: 
Rev.  St.  issi,  §  .-L'7(;;  Jlamui  v.  Island  Coal  Co.,  (!  Ind.  A|)ii.  V,:\,  .'51  N. 
!■:.  M<;.  luwa:  .McClains  .\iiii.  Cndc  ISSS.  SS  l.'J>;i.  2tt4;  Wiiislow  v.  H:iilroad 
Co.,  71  Iowa.  r.i7.  :;•_'  .\.  W.  ;;:;<i.  .Soulli  Dakota:  Coiiip.  Laws,  §  47(i;  I'irie  v. 
Ilarkness.  .".1*  .\.  W.  .",S1.  Kansas:  (Jen.  St.  IKS!),  jKir.  .'{ii.'i;  Turner  v.  f:r.iw- 
fonl.  14  Kan.  4!»:i;  Kansas  I'.ic  K.  Co.  v.  Tliaclier.  17  Kan.  'S2.  Kentucky: 
Gen.  St.  1S,SS,  c.  5,  §  lo;  Stephens  v.  Farrar,  4  Rusli,  i:'..  Louisiana:  Rev. 
Laws  18S4.  §  28lt7.  Miehit.'an:  '2  Ann.  St.  ls.s-_>,  §  7710;  Kinney  v.  Tabor,  Oli 
Mieh.  .'".17.  li'.t  .\.  \V.  sc.  .".12;  Wells  v.  Kls.nii,  Hi  .Mi(  li.  IMS.  M.ijnc:  Hob- 
sou  V.  W:its(.n.  ;;4  .Me.  I'd;  Ncwhert  v.  Cunuiii;;liaiii.  .".(i  .Me.  L'.'.l.  .Maryland: 
See  Marsliall  v.  Cooper.  4:5  Md.  4i;;  Strikes'  Case.  1  Hland  .".7.  .Ma.s.sa<-liu- 
setts:  Oeean  Ins.  Co.  v.  Rider,  22  IMek.  210;  Thayer  v.  Daniels,  113  Mass. 
120:  Siininons  v.  Alniy.  103  Mass.  .3:5.  See  Baker  v.  C^ok.  11  Mass.  230. 
Minnesota:  Gen.  St.  18!)4,  §  GllU;  Dodd  v.  I5rott.  1  .Minn.  270  (Cil.  20.-,);  For- 
biish  V.  Leonard,  S  Minn.  3o;{  (Gil.  2C.7):  Ciowl.y  v.  Le  l)u<-.  21  .Minn.  412; 
Henry  v.  Trayuor,  42  .Minn.  234,  44  .\.  W.  11.  ni-,-.,n:  2  Hill's  Ann.  Laws 
1802.  §  1044;  In  re  Seo^';;in.  5  Sawy.  .-.40.  Fed.  Cas..  .N'o.  12,.")11.  .Mississippi: 
Stewart  v.  Flowers.  44  Miss.  .->i:5;  Fuyh  v.  Royd.  3P  Miss.  320.  .Montana: 
Comp.  St.  1887.  p.  023.  Nebraska:  Comp.  St.  1887,  §  i:W;  Patrick  v.  Leach, 
2  McCrary,  035,  12  Fed.  G(il;  Abbott  v.  Abbott.  18  Nob.  oo:!,  20  .\.  W.  :50l. 
New  Hampshire:  Youuj;  v.  Dearborn.  27  .\  II.  :!24:  Wliiteouib  v.  Straw,  02 
N.  H.  0.-(t:  Currier  v.  Railroad  Co.,  37  N.  II.  22::.  .Vew  .Jersey:  Heister  v. 
Mount,  17  N.  .T.  Law,  438;  Braden  v.  Ward.  42  N.  J.  Law,  TAS;  Barnes  v. 
Taylor.  30  N.  .1.  Va\.  407.  New  York:  The  lien  is  upon  the  cause  of  action, 
(ioodrich  v.  McDonald.  2  .\.  Y.  St.  Rep.  144;  Whitaker  v.  Railroad  Co.,  3 
N.  Y'.  St.  Rep.  r.:57;  McCabo  v.  Fopp:,  00  How.  Frac.  (X.  Y.)  48.S:  Lausiuff  v. 
Ensif,'!!.  02  How.  I'r.i.-.  (\.  V.i  ;;(;;;;  in  re  n.-iiley.  00  11. .w.  i'i;i.'.  iX.  V.i  f.l; 
Tidlis  V.  Bushnell.  0.3  How.  Prac.  (.X.  Y.)  40.",;  Oliwcll  v.  Verdenlialveu.  17 
Civ.  Froe.  R.  302,  7  N.  Y.  Supp.  Oi);  Roonoy  v.  Railroad  Co.,  18  N.  Y.  :30S; 
Wrijrhi  v.  Wrif^bt.  70  N.  Y.  loO;  .Marshall  v.  .Meech.  .".l  X.  Y.  14(i:  Cou-ldin 
V.  Railroad  Co..  71  N.  Y.  443.  South  Carolina:  Sharlock  v.  (dand.  1  Rich. 
Law  (S.  C.)  207;    Miller  v.  New  ell.  20  S.  C.  123.     Tennessee:    Hunt  v.  .MeClau- 


ATTi'JtNKV     AM)    tllKNT. 


G  14 


i(  rs  r«-lulcT«  <l  ill  lllr  olln-IS.  '  '"  hi  somr  sI;|liS  till-  lirll  is  CDlifiucil 
to  llif  l;i\«(|  rtisls  .111(1  llif  at  loiiiis 's  (lisltiiisciin'iit  s.- ' '  'riiis  was 
oi  iuiiiallv.  |i«-rlia|)s.  iln-  iiiiixtTsal  nili*.  In  otluT  stales.  ili<-  lim  is 
i-.\tt'H«l«(l  to  iiirliidc  tin-  fi'f  for  liis  sfi\  it-cs.-"""  Tlit-  lim  docs  not 
I'Xli'iid  to  |ifos|M'«tivt'  stM'\ic«'s  ill  tin-  lirariiiL;  of  an  appeal.-"' 


ulinn.  1  lli'isk.  ('rciiii.i  .'.(i.''.;  Itjnwii  v.  Iliclcv.  .',  I'tiii.  fli.  tWS;  I'itUIiis 
V.  I'cikins.  [)  Ih'lsk.  (Ti'iiii.)  nr».  Nrrmnut:  W..<1  .<i\\iiii;  M;icli.  ("o.  v. 
r.-MHi  III',  .'iti  Vt.  r.Tn;  H.Ki|i.T  v.  \\cl<  li.  »;:  \i.  it;;».  Vli^lnl.i  timl  \V»'st  Vir- 
ginia: Kmick  V.  Ianliii;:iun.  V\  W.  Vii.  ;'.7s;  (Vitli'  Va.  IST.!.  <•.  lun,  §  11;  t'oile 
\V.  Va.  issT.  (..  1151.  $  i.{.  Wyoming:  I'onip.  St.  Wyo.  issi,  p.  m;.  r.  7.  g  81. 
Tlio  lion  tkn's  not  t-xist  in  tlii-  fi>lli)wiii;;  states:  <';ilir<>inla:  ll<i;;an  v.  Hlaek. 
•  ;<;  Cal.  41.  4  I'ac.  ;t4:!:  Kussdl  V.  Cniiuiiy.  11  (al.  '.I.:.  i:\  partt'  Kyh".  1  I'.il. 
Xn.  Illinois:  I'l.rsytlu'  v.  I{i'V»Mi<l«i>.  .VJ  III  I'CiS;  M.iiols  v.  r<M>l.  S<>  III.  4!»1: 
.<ainl<'rs  v.  Strlyr.  lliS  111.  (^51.  L'l  .\.  K.  r.ol :  I.a  Franilxilso  v.  «;r<iw.  ."•!  III. 
inT.  An  tM]nital)lo  lien  exists  on  tlic  pmiccils  ot'  litiL'.-itinii  wlicrc  tlu-rt' 
is  u  spffial  <'(»utract  of  ciiiploynu'iit.  !>niilh  v.  Vonn^'.  <1L!  111.  iM't.  Missonri: 
I.owis  V.  Kiin-aly,  'J  Mo.  Api».  ;{;*.;  Fiisst'll  v.  Ilaih'.  is  .Mn.  is;  Kolx-its  v. 
.\4  Isnii.  !'■_'. .Mil.  Ajip.  I'S.  (liiiii:  Dirlil  v.  Friosici.  ;i('  Ohio  Si.  47."'..  Ti-xas: 
Casey  V.  Maivh,  30  Tex.  iSO;  Whiilaker  v.  Clarke,  33  Tex.  r)47.  Wisconsin: 
Conrtin-y  v.  MeGavock.  'S.i  Wis.  till). 

••'•o  .Massailinsetts  &  S.  Const.  Co.  v.  (Jill's  Creek  Tp..  4S  rd.  II.".. 

20T  Nfwliert  V.  Cnnninj,'liani.  ."lO  Me.  '2iU;  Hooper  v.  Hrninla^'e.  2'2  Me.  4t!0; 
O.-.-an  Ins.  Co.  v.  Kider,  JJ  Pick.  (.Mass.)  L'lO;  Wells  v.  llaicii.  4:;  N.  II.  iMti; 
Whitcoiub  V.  Straw,  tili  .\.  11.  U'.U;  Weed  Sewinj;  Midi.  Co.  v.  Hontelle.  ."><] 
\  t.  .".7n;  Kx  parte  Kyle,  1  Cal.  331;  Manslield  \.  Doiland.  2  Cal.  .'ii»7;  Massa- 
c  imsctts  A:  S.  Const.  Co.  v.  Cili's  Creek  Tp..  4S  !•  ed.  14.">;  Con;.'lilin  v.  Uaiii-oad 
Co.,  71  .v.   V.  44:{. 

^""  IlfiK-liey  V.  City  of  ('liic.i;;o.  41  111.  M\t'>:  Ilnniphrey  v.  Brownin;;,  4ti  111. 
47<;;  Kinney  v.  Talii.r,  t;L'  .Midi.  .■•.17.  -".•  .N.  W.  St;,  r^■\•2•.  Wells  v.  Klsaiu,  40 
Midi.  lilS;  Warlield  V.  Canipliell,  .38  Ala.  :.J7;  MiDoiiald  v.  Napier,  14  Ga. 
8J»;  Carter  v.  Heniiett.  ti  I'la.  lil  I;  Cart»'r  v.  Davis,  8  I'la.  is;;;  Pop.-  v.  .\riii- 
stron;:,  .3  Sniedes  A:  .M.  (.Miss.i  L'M;  .\iidre\vs  v.  Morse.  12  Conn.  444;  Ilill  v. 
I'.rlnkley,  Iti  Ind.  Hi:.':  Ccinnil  RailnMii  \  U.iiiluii-  Co.  v.  rctins.  li:;  V.  S. 
in;,  ."i  Suji.  Ct.  :;.S7;  llersliy  v.  IMi  \al.  47  Mk.  s>\.  n  S.  W.  jr.'.i:  In  re  Mailey. 
f)»;  How.  I'ra<-.  (.X.  V.i  t;4;  Tnllis  v.  Hnsliiiell.  t;.*.  11, .w.  I'l.ic  (N.  V.i  4i;.';  Oil- 
well  V.  Nerdeiilijilveii,  17  Civ.  Pioc.  IJ.  ;!(;•_',  7  .N.  V.  Snpp.  P'.';  .McC.ilie  v. 
loy;;,  i;ii  How.  Pr:ie.  (.\.  V.i  Iss;  l.jinslii^  v.  I'aisiu'ii,  t;:.'  How.  Prae.  i.N.  V.I 
:ifc'..  .\n  attorney  lias  :i  lieu  on  lii<  dieiiis  eaiise  of  .•ictioii  for  eompiMisation 
that  may  l»e  dne  him  for  services  in  th.at  or  any  otlier  proceediiu'.     Can.ary  v. 

l:u->*e|l.     I'l    .Mi^e.    l:ep     .V.t7.    .".1     .\.    V.    Sllpp.    IPl 

tft  MnssurLuHetts  \  S.  Const.  Co.  V.  Cills  Creek  Tp.,  4s  I'ed.  14.'.. 


§    14;  AT'JCUNKVS'  (  IIAIC<.I.\(.    I.IKN.  37 

ll7/<//    L>rn     Aftilrh.s. 

'I'lic  cli.ii-^iiii;,'  litii  (Ifics  iHtl  iillMcli  iiiilil  jinl;:iin-ii(  is  ciilcrcd.  ill  tin- 
iibscncc  <)(■  siiiiiiitny  i»';:iil;iti(»ii.-"'  ll  ddcs  not  iillmli  iiitoii  iciidi- 
tioii  of  \('i(Ii<l.  in  X<\\  ^'oik  mid  soiiw  mIIkt  slat<'S.  Ii(»\\  t'\  i-r.  lln* 
st;iliitc  ^ivcs  ;i  liiii  ii|hiii  ilir  cinisc  of  action.  ,ind  in  tiifsr  slali-s  tlw 
lirn  dahs  from  lln  cdMiini  nrfnicnl  ol'  ihc  acrntn.-''  I'litii  llo-  Jii-n 
alta<iirs.  Ilic  [tallies  may  sfltlc  tli<-  suit  uilhout  rc;;aid  to  ili.-  al- 
(oiiK  v.- '  - 
2o    W/idf  Lien  Attacfies. 

Till'  lien  is  on  llio  judj,Miu'iit,  not  on  tlio  snbjcct-inattcr  of  llio  ac- 
tion.-'' niilcss  otliciw  iso  ]ir<»\id<'d  l»y  statute.  In  a  few  states,  how- 
ever, tlic  litii  is  hild  lo  cxttiid  to  (lie  property'  in  litigation,  whether 
real  oi'  JM  rsonal.-'^ 

•^10  Miirsh.-dl  V.  Mt'ccli.  .%1  \.  V.  Mo;  Slijuilv  v.  Slionnaker,  IS  N.  Y.  489; 
SwiM't  V.  r.iirtlt'tt.  4  Saiidf.  (N.  Y.)  Ciil;  Kooni-y  v.  Uadroad  Co.,  IS  N.  Y. 
SIJS:  Wriulil  V.  Wii^'iit.  70  X.  Y.  'Jt!;  C<)U;.dilii.  v.  Kailioad  Co.,  7t  N.  Y.  4^."!; 
C'rotty  V.  .MacKi-nzic,  .'.:.•  llow.  IMac.  (\.  Y.)  54;  TuUis  v.  Hushncll.  0.")  How, 
Prac.  (N.  Y.»  4C..";  Sullivan  v.  oKt'clV.  '>'6  How.  I'ra?.  (N.  Y.)  42*;;  Totter 
V.  Mayo,  3  Me.  34;  Hobsoii  v.  Watsou,  34  ^lo.  20;  Hanua  v.  Coal  Co.,  5  lud. 
App.  It;:?.  31  N.  K.  84(1;  ^Vl'lls  V.  Hatcli.  43  N.  II.  24!.;  Hooper  v.  ^Vek■ll.  43 
Vt.  1G9;  Weed  Sewiug  Mach.  Co.  v.  Boutelle,  5G  Vt.  570;  Henchey  v.  City  of 
Chicaf,'o.  41  111.  13<;;  Ci'tclit'll  v.  Clark.  .")  Ma.ss.  .3n:»;  Brown  v.  KiKl<-y.  3 
Teun.  Ch.  1518;  Kusterer  v.  City  of  Beaver  Dam,  50  \Vis.  471,  14  N.  W.  G17; 
Courtney  v.  MetJavock.  23  Wis.  r.22:  Newbert  v.  Cuniungliani.  .">o  .Me.  231; 
Lamout  v.  Uailroad  Co.,  2  Mackey  (D.  C.)  502 

211  Code  Civ.  I'roc.  X.  Y.  1879,  §  GO. 

212  See  cases  eited  iu  note  210,  supra.  It  lias  been  held  that  a  settleiueut 
before  judgment  will  not  defeat  the  attorney's  lien  for  cost.s  and  charges 
which  are  legally  ta.xal.Ie.  Swain  v.  Senate.  2  Bos.  &  P.  (N.  li.)  99;  Cole  v. 
Bennett,  G  Price.  l.">;  Morse  v.  Cooke.  13  Price,  473;  Ka.siiuiu  v.  Stage  Co., 
12  Abb.  Prac.  (N.  Y.)  324;  Dietz  v.  McCallum,  44  How.  Prac.  (N.  Y.)  493; 
Talcott  V.  Brousou,  4  Paige  (X.  Y.»  ."01.  See,  also,  Lamont  v.  Kailroad  Co.. 
2  Mackey  (D.  C.)  502;  Parker  v.  Bligiiton.  32  Mich.  2i;<i;  Wrigiit  v.  Hake. 
38  Mich.  525;  Courtney  v.  McGavock.  2.3  Wis.  022.  In  Howard  v.  Town  of 
Osceola.  22  Wis.  433.  a  discontinuance  was  set  aside  to  enable  the  attorney 
to  proceed  to  collect  costs  of  the  action  and  his  fees. 

213  McWillianis  v.  .Jenkins.  72  Ala.  4So.  Xo  lien  on  lauds  for  services  re- 
specting title.  Lie  v.  Winston,  GS  Ala.  402;  McWilliams  v.  .Jenkins,  72  A'la. 
480;  Shaw  v.  Xeale.  c.  11.  L.  Cas.  581;  McCullough  v.  Flournoy,  G9  Ala.  189; 
Hershy  v.  Du  Yal.  47  Ark.  SG.  14  S.  W.  4G9;  Humphrey  v.  Browning,  4G  UL 
47G;    Sti'wart  v.  Flowers.  44  Miss.  51.3;    H.mgcr  v.  Fowler.  20  Ark.  GIm. 

21."  Hunt    V.    .McClanalian,    1    Ileisk.    O'ci'")    «^»'^'3;     I'erkins    v.    I\Tkins,    9 


38  ATTORNKY    AND    rl.lKNT.  C§    l"* 

An  ;iiioriii-.\  s  lien  (jikrs  prioiily  <>\.r  ;i  srt  otT  ;i«-(iiiir»Ml  ;iff<M*  the 
li.ii  hits  ;ill;nlif«l.-'"'  ImiI  it  is  siilijrcl  t(»  llic  jud^MiH'iit  dcltlni-s  ri^'lit 
In  set  olT  (Irmaiuls  cxisliii}:  :it  lliiit  liiiic.-''  In  som.-  shihs  lln-  iil- 
loriifv  imisi  ii'iM'  iiotici'  (if  his  liMi.-'"  in  oiiitis.  no  iKiiiri'  is  rr- 
(liiin-il.-'-*  In  Ni'W  York.  wAww  the  lini  is  uu  llic  taiisc  (»f  adion, 
no  notiiM'  is  nrcossjiry.'--'^  A  jncl^rim-iii  for  costs  alono  has  Itocn 
li.lil  iioticr  of  tho  att(tiiir\s  litii.--'  'I'hc  lirii  w  ill.  of  .tHH-sf.  pifvail 
(IV.  r  a  (iillusivr  set  tiriiiciit ;  and  tlir  atl<>i-n»'\  may  rrcovt-r  fnmi  tlio 
olipositr  party  thr  amount  of  his  rjaim.-*- 

H.lsk.  (T.-nn.^  It.'.;    Skn^'K's  v.    Hill   (!<>•   M   S.   W    :•.••..•.  .niid.-r  stMtuin;     Fill- 
more V.  Wt'lls.  10  Colo.   L':'.1.   ir.   I'Mc.   ;{4:{  ouult  r  sliituHM. 

2i«\V;irnHd  v.  (':>iiiph«'ll.  :w  Ahi.  .VJ7;  lloylr  v.  Hoylr.  lof.  N.  V.  f.r.l.  I-' 
.\.  K.  7n<»:  <"a\idl.'  v.  Kir.>.  7S  Ca.  SI.  ."?  S.  K.  7;  PliTco  v.  La wrfiicf.  Hi  I.ca 
(Tt-nn.)  :>T2,  1  S.  W.  20 J. 

-IT  Hosworth  V.  Tallnian.  or,  Wis.  J'J.  27  N.  W.  KH;  1. 1..  OC,  Wis.  n.'W.  29 
.\.  W.  .'.42:  Moli.iwk  Itnnk  v.  Kurrows.  0  Jolms.  Cli.  N.  V.)  :517:  Porter  v. 
I-.-in.'.  S  .Tohns.  (N.  Y.)  X>1;  Nicoll  v.  Nicoll,  10  Wend.  (N.  Y.)  440;  National 
Hank  ..f  Winterset  v.  Kyre.  .s  Fid.  7:;.i;  Kx  parte  Lehman.  .V.t  Ala.  *>:U; 
Ihirst  V.  Sheets.  21  Iowa,  ."(d;  (;aK«'r  v.  Watson.  11  Conn.  HiS.  Ci-nerally. 
as  to  effect  of  set-ofT  of  jndjjmcnts,  see  Delauey  v.  Miller.  S4  Hun.  2tt.  :;2  N. 
Y.  Supp.  .'o.-,;  Kolterts  v.  .Mitchell.  114  Tenn.  277  2!>  S  W.  .":  Kevins  v.  Albro. 
.^;  Hun,  '>'M,  3,3  X.  Y.  Snpp.  107V»;    Field  v.  Maxwell.  44  Neb.  IKK),  U'{  N.  W.  02. 

-I'-Dodtl  V.  I'.n.tt,  1  .Minn.  27o  ((iil.  2o.-.i;  ilurst  v.  Sheds.  21  low.i.  .'.nl ; 
.Marshall   v.    Meecli.   51    N.    Y.    140. 

-ladammon  v.  Chandler.  30  Me.  1.".2;  Ilobson  v.  Watson.  :\\  M.'.  2i»:  Ncw- 
Pi-rt  V.  Cunnin^diam.  ."O  .Mc.  2:'.l;  Weeks  v.  W.iyne  Circuit  .Iu<l-e,  7:;  Mi.h. 
2.'.<;.  41  N.  W.  201>. 

=  20  Albert  rainier  Co.  v.  Van  Orden,  Gi  How.  Trac.  (N.  Y.)  7!);  Coster  v. 
(;neii  Point  Ferry  Cii..  .".  N.  Y.  Civ.  Proc.  K.  140;  (Joo«lricli  v.  M<l>onalil.  41 
Hun.  2.30.  An  attorney's  lien  for  conipensalion  att.iches  to  the  judgment 
in  the  haiuls  of  an  assignee  for  value  witiioui  n->ticc.  Cvdi.-ino  v.  \\liilen:ick, 
:<  MIm-.  U»-|>.  •"t;2,  :5<i  N.  Y.  S\ipit.  41.'.. 

-21  Marshall  v.  .Mec<-h,  .".1  N.  Y.  lH';  .Mc(!reu..r  v.  Comstock.  2S  N.  Y.  2.37; 
ILiiclit  V.  llol.-ond>,  H:  I1«.\v.  Pi:i<-.  (N.  Y.i  17;'.;  Slr.ilinn  v.  llu<sry,  02  .Mc. 
•jm;. 

-•-■2  Whart.  A«.  §  f'27;  MttJreKor  v.  Comstock.  2S  N.  Y.  2.37;  M<d\en/.le  v. 
W.-iidu.ll.  01  .Me.  i:'.t;;  ple.-isaiils  v.  Korlrcclil.  .'.  I!ei«k.  o;il:  I'oot  v.  3ewks- 
biiry.  2  Vt.  •J7;  Currter  v.  Hailrond  Co..  37  N.  11.  22.'.:  Ke.id  v.  Duiiper.  0 
leruj  U.  30,1.  i:ffe<t  of  compromise  am!  settlement  b\  parlies.  Shecdy  v. 
.Mc.Mnrtry,  44  Neb  i'M.  (U3  .\.  W.  21:  Kcanc  v.  Kcmm  so.  Ilun.  l.'.'.t.  'M\  N. 
V.  Supp.  2.".0;    Parsons  v.   llawhy   dowai  On  N    W    .".2o;   K..l..iis   v.   Uallroad 


§    15;  CO.M  IDKNTIAI,   <<).m\ii:mc.\ii  i.N.S,  '•'/•) 

Wd/'rf'r  of  IJ>  n. 

All   al  l(tiii<'\  s  rliai^iii;^   lii-n    may   !»••  waiMiI   or  l<isl    in    (Ik-   saiiK' 
iiiaiiiicr  as  a  jifiicial  or  rriainiii^  licii.--^     'J'lic  lii-ii   is  lost    \\s   tlir 
ahaiKloiuiiciit  of  tiic  rase. 
Knfoi'ci'iittJit  (if  Lull. 

Tin- jifii  of  an  allormy  ii|ioii  a  jud^iiH'iil  i'('('(»v<'Im<I  liv  liiin  will  Im- 
♦'iiforccd  atconiiii;^  (o  liir  law  <if  the  slate  wlidc  tin-  lirii  allaclifMl, 
and  not  accordinj^  to  tli<'  law  of  iln-  slali-  wluir  ijic  jiid^^nicnl  is 
sou;,dit  to  hv  collected.-"-''  An  alloiiicy  is  ie;j;aide(l  as  an  e(|iiilal>le 
asslj^nec  of  the  judgment  to  (lie  extent  of  liis  lien.--"  He  may  en- 
force his  lien  liy  an  action  on  Ihe  jnd^nient  in  the  name  of  his 
client,--'  lull  iioi  in  his  own  nanie.-'-"  Wheie  a  fund  is  in  cour'f, 
on  motion,  the  coni'l  will  order  |iaymenl  to  the  attorney  out  of  the 
fund.--"  The  lien  continues  and  may  he  enforced.  1hou;^di  the 
ilienfs  debt  secured  by  it  is  barred  by  the  statute  of  limitations.--" 

SAME— CONFIDENTIAL  COMMUNICATIONS. 

15.  An  attorney  cannot  be  compelled  and  -will  not  be  per- 
mitted to  disclose  confidential  communications  made 
to  him  by  his  client,  except — 

EXCEPTIONS  (a)  Where  the  communications  relate  to 
the  proposed  commission  of  a  crime. 

(b)  Where  the  disclosure  is  necessary  to  the  attorney's 
protection. 

Co.,  84  Hull,  4;!7.  '.V2  X.  Y.  Su[)i).  3S7;  Voig^t  Brcwe'-y  Co.  v.  Donovan,  in."? 
Mich.  190,  Gt  X.  W.  :U;5;  Crouch  v.  Iloyt,  24  Civ.  Proc.  It.  »!0,  :{U  X.  Y.  Supp. 
40G;  Cauaiy  v.  Russell,  10  Misc.  Rep.  597,  31  X.  Y.  Supp.  Ii91;  Mosely  v.  .lanii- 
sou,  71  Miss.  450.  14  So.  529;    Foster  v.  Dauforth.  5'J  Fed.  750. 

228  See  ante,  p.  33. 

225  Citizens'  Xat.  Bank  v.  Culver,  54  X.  II.  327;  note  on  enforcing'  attor- 
ney's lien,  10  Abb.  X.  C.  391. 

220  Jones,  Liens,  §  232;  Xewbert  v.  Cunningham,  50  Me.  231;  Mosely  v. 
Xornian.  74  Ala.  422:  Kx  parte  Lehman,  Durr  &  Co.,  59  Ala.  t>31;  Wottds  v. 
Verry,  4  Gray,  357;  Marshall  v.  Meceh,  51  X.  Y.  140. 

-•-•■  St.  ne  V.  Hyde,  22  Me.  318.  But  iiot  without  authority  from  his  client. 
Horton  v.  Champlin,  12  R.  I.  550. 

•-->  Adams  v.  Fo.\.  40  Barb.  442. 

-••-'»  \Valker  v.  Floyd.  30  Ga.  237;    Smith  v.  Goode,  29  Ga.  1S5. 

230  Higgins  V.  Scott,  2  Barn.  &  Adol.  413. 


-10  ATTOKNKY    AND    Cl.lKNT.  (§    li> 

< '(iiiiiiimii«;itiniis  iiiailf  to  :iii  ;iiioiiic,\  !•>  his  iliciil  for  iln-  imriMisi- 
•  if  olii.iiiiiiii:  his  .i»l\  i<r  and  assist  a  mc  an-  |tii\  ilt'i^id  ;  I  ha  I  is  in  sa>  . 
ihf  alluiiH'V  will  tiol  lu-  ((iiiiiuih-d  (tr  pfniiit  led  l»»  disrhis.-  liiciii. 
This  |tii\ih;:('  i-«sts  cm  rrasdiis  (»f  piildii-  policv,  ^Mowiii;;  «iiil  of  ihr 
ri»iili«h  iilial  tliafatlt  r  of  tin-  ichil  iuii.  and  ihc  mii-ssil  \  thr  clii'iit 
is  undci-  (»f  iiiaiiiii;;  full  disclosuir  1<»  ciiahh-  iIk-  attoimv  in  succrss- 
fidlv  condnrt  his  »aus«'.-'''  Tin-  rxislfiicc  i»f  lln-  irlalioii  of  allor- 
iirv  and  tliciii  is  essential  to  the  cxisicinr  (if  Ihc  |irivii(';;«'.-^-  A 
formal  rriaiiitr  or  tin-  |ia\iiiiiii  of  a  frr  is  not  ntM-cssafV, '-''•''  liowi'VtT, 
and  loninnmitaiions  in  ani  icipaiion  of  fiu|th».vinrnt  arr  privilc;;- 
rd.-'*  r»nt  coininunitMt i(»ns  niadr  lo  an  aitoincv.  noi  in  his  jiro- 
ftssional  tapacit.x .  l»ut  as  a  fiicnd,  aif  iioi  [iiix  ilf;,M'<l.--'^  Of  conisi', 
if  ilic  jwison  to  uhoiii  lilt'  conininnicai  ion  is  made  is  not  an  aiior- 

2n  Hatinii  V.  Itnliiiistin,  14  I'ick.  (M.iss.i  wr,;  Cn^liy  v.  Horp'i'.  H  Titi;:*' 
(N.  V.I  ;;77;  Covtiify  v.  'launahill,  1  Hill  (N.  Y.i  .■.;'.;  I'.;mk  of  l"ti<-a  v.  M.r- 
s.r.-aii.  .'.  Marl).  Ch.  (N.  Y.)  .".liS;  WiUiauis  v.  I'iiili.  is  .\.  Y.  .'..'.1;  Mritton  v. 
Loniiz.  4.".  N.  Y.  51;  Thomi)son  v.  Kilboriu-.  Js  \l.  T.'.o;  Iltniifr  v.  Watson. 
IJ   <'al.   ;{•".:{. 

^3-'  Mrclu'in,  Ag.  §  Ns;>;  Kuchfstfr  City  Maiik  v.  Suydaiu,  .")  How.  I'rac.  (.N. 
Y.I  i:r.4;  Eark-  v.  (Jrout,  4<i  \i.  li::;  itanilolpli  v.  (juiduick  Co.,  I'lJ  Fed. 
i:7s;  llousi'  V.  Iltius*'.  (11  Mich,  on,  :,'T  .\.  W.  s.'.s;  Shar.ui  v.  Sharon,  T'J  C;il. 
t^Sli.  ir_'  I'ai'.  •-'<;.  l."!l:  Hrayton  v.  Chasf,  :;  \Vi<.  A7>i'>:  ( Jraiij,'('r  v.  Warrington, 
;?  (Jiim.  (111.1  •_".>;•:  ICockford  v.  Falvtr.  L'T  HI.  App.  »>n4;  Rog.-rt  v.  l?ogt'rt, 
J  i:d\v.  Ch.  (.\.   Y.I  ::'.•;•:    I'.irkcr  v.   Cartti.    l   .Miiiit.  (Va.i  2i:\. 

-'»•■' Haonn  V.  Frisliic.  so  N.  Y'.  .">'.M:  .Mar<h  v.  l.ndltnii,  :>  Saiidf.  Ch.  (N. 
Y.I  .'..'>:  fust.r  V.  Hall.  Ill  IMfk.  ^.Mas.s.)  SU;  lU'ltzhoovt-r  v.  HhiLkstock.  :i 
Willi-  il'a.i  liii;  Cross  v.  Ki;,'giiis.  ."•(»  Mo.  33").  Cl.  Th<iiiiiison  v.  Klllioriu>, 
js  \t.  ToU;    Cuts  V.  I'ic-kt'ring,  1  Vent.  1"J7. 

-■'«  liacoii  V.  I'risltii',  .so  N.  Y.  :ili4;  Thorp  v.  (ioov.  i\v.  .s.">  111.  Cll;  (MIon  v. 
.MH'ord,  :{:J  Wis.  I'Oo;  Crus.s  v.  Uiggins,  50  Mo.  .*i.'{5;  Young  v.  State.  (15  «;a. 
-•_'5;    I'.,  ail  V.  (^iiiiiil)y.  5  .N.    H.  '.U. 

-li  1  (Jrct-nl.  Kv.  8  LM4;  Coltra  v.  Wulcott.  14  111.  .Vt;  Cady  v.  W.ilk.i-.  CJ 
Mi<h.  157.  '.'s  .\.  W.  su.",;  HolTiiiaii  v.  Siiiitii.  1  (aiiU's  (.N.  Y.i  157.  'riifir  Is 
no  privlh'gc-  wlit-rt'  an  attorney  is  *Miiployi'<l  as  a  iiicrc  scrivi-iuM-  or  convt-y- 
:ini«-r.  House  v.  House.  (U  .Mich.  tV.K  1'7  N.  W.  S5S;  Heliliard  v.  Haugliian. 
7n  .\.  Y.  54;  Smith  v.  I.oim.  M";  111.  IS5:  He  W  nil  v.  Stradi-r.  !.'<;  111.  •_'-J5; 
Hatton  V.  Uoliiiisou,  U  Tick.  41ii;  .\pipe:il  of  (Hiodwin  Cas  Stove  A:  Meter 
<,  .  117  I'.i.  St.  511.  IJ  .Ml.  7.".<'..  Cuiilra.  (n-tzlalT  v.  Stdiger.  4.".  Wis.  ■_".i7: 
Parker  v.  Carter,  4  .Miiiif.  (\a.l  L*7:{.  See.  geiierjilly.  Hrowii  v.  .lewett.  ll'O 
Mans.  ^15;  .lohnson  v.  Haverne,  1'.)  Jolins.  (N.  Y.>  1.J4;  Clark  v.  Uichards, 
,   i;.  H.  Siullh  (.N.   Y.I  v.). 


§     I'l)  COM-IDKNTIAI,    ((iMMfNICATIONH.  11 

iicv.  llii'  rrlnlidii  of  ;i  i  luincv  iiikI  .lirnt  cniiiKit  fxisl.  iiiid  ili<-  r<iiii- 
iiiiiiii<;il  ion  is  luit  pi  i\  ili'^rd.-  '•  'I'Ih'  |iii\  ib-;,'*'  cxIcikIs.  Iiii\vc\<'r. 
to  (•((iiimiiiiiiiil  ions  in,i<lr  lo  inh-rprclrrK,  iij^mls,  :inil  atlorrK-y's 
clerks.-'  "  I(  is  also  i  .ss(nli;ii  lo  llic  rxislenrc  of  tli<'  |»rivil<';r»'  tli.il 
llic  coininiiniciil  ion  Itr  conrKliiil  i;il.  'I'iins,  coinninnir;!!  ions  ni;i<Ii- 
opiiilv  in  iln'  pi'  seme  of  oi  Iici's,-''"  or'  niinli'  for  tin-  imi'posc  of  iM-in;,' 
(  oniniuni(;ii<(|  liy  (lie  attoiiirv  (o  olln  rs.  •'"  hit  not  privilc^^cd.  I'.nl 
a  special  injnnclioii  ttf  secrecv  is  nol  essential  lo  llie  privile;:e.  ami 
il  allacln-s  |Ii<mii:Ii  lln-  client  was  nnawai'e  of  il.-''  Tlii-  pii\  ile;,''" 
<1<)«'S  not  apply  lo  collaleial  fads  involvinj^  no  matter  of  contidence. 
such  as  llie  faci  of  his  eniplo\  nieiil.-'^ '  the  name  of  his  client.-^-'  and 
the  like.-'^  ■  The  comnitinical  ion  nnisl  lia\e  been  made  Ity  the  clieni 
lo  the  attorney.      Win  re  il   is  ma<Ie  lo  third  pi-rsons  and  overheard 

:••"■'  .M<'I.au.i;linii  v.  Cilinmc.  1  111.  .\i>|.  ."iC,;;;  Iloliiuin  v.  Kiiiii..ill.  SI  \t. 
fi.".";  S;iiii|>lf  \.  I'rosl.  lo  Iowa.  lUIti;  I'.anics  v  llaiii;..  7  ("nsli.  (.Mass.i  ."iT"!. 
The  nilf  aiiplics  only  to  llccnstMl  attorneys,  llolnian  v.  Kimball,  '12  Vt. 
.">.".  Cf.  Hcncdict  V.  State.  44  Ohio  St.  f.Ttt.  11  N.  K.  V1T\.  wlicrc  it  was  hcM 
coiniiiniiicatioiis  to  a  persou  rejjularly  iiracticinj;  in  a  jnstice  court,  lint  who 
was  nut   an  atlnrncy.    were  privilcj^cd. 

237  Foster  v.  Hall,  IL'  Tick.  (Mass.)  81). 

2-»s  MobiK",  ttc..  K.  Co.  v.  Ycatcs,  (iT  Ala.  107:  .tackson  v.  French.  ?,  Wend. 
(N.  Y.l  WM;  House  v.  Hou.se.  (il  Mich.  r>J».  L'7  N.  W.  S.-,S:  (J.allaKlier  v.  Wil- 
liamson, 2.*?  Cal.  ;{:n;  Hartford  Fire  Ins.  Co.  v.  KcynoUls,  'M\  .Mich,  .'oi'; 
Hu;.dies  V.  Hoone.   KiL*  .\".  C  1.''.7.  !•  S.   E.   liS(i. 

•-::i!.  Henderson  v.  Terry.  CJ  Tcx.  I'M;  Hipon  \.  Daviis.  l'  .Xcv.  ^  .M.  :;Hi; 
Hu^rhcs  V.  Boone,  102  N.  C.  l.'^7,  0  S.  E.  2.S<;;  Cady  v.  Walker.  t;2  Mich.  ir,7, 
2,s  N".  W.  .so.".;  Bartlott  v.  Bunn,  .jU  Huu,  .j07,  10  N.  Y.  Supp.  2ln;  White  v. 
State.  S(i  Ala.  (i9,  5  South.  074. 

:i4u  McLellau   v.   Lon^'fellow.  32  Me.  404;    Wheeler  v.   Hill.   10   M»'.   320. 

-MI  White  V.  State.  SO  Ala.  (ill.  H  South.  074;  Mobile  etc..  U.  Co.  v.  Yeates, 
G7  Ala.  HU;  Leiudecker  v.  Waldron,  .j2  111.  283;  Gower  v.  Emery,  IS  Me.  79; 
Chirac  v.  Keinicker,  11  Wheat.  2S0:     Forshaw  v.  Lewis.  1  .Tur.  (N.  S.i  2(i3. 

2*2  Fulton  V.  Maccrackeu,  IS  Md.  .j28;   Levy  v.  Pope,  1  MiMxly  A:  ^L  4lo. 

2<3  Wheatley  v.  Williams,  1  Mees.  A:  W.  530;  Brown  v.  Fayson.  0  N.  H. 
443;  In  re  Austin.  42  Hun,  ."»l(i;  Burnside  v.  Terry.  ."1  Ca.  ISO;  Hebbard 
V.  Hauuhian.  7i>  N.  Y.  ."4:  House  v.  House.  01  Midi.  (i!».  27  N.  W.  858;  Cady 
V.  Walker.  02  Mich.  ir»7.  28  N.  W.  So.".  An  attoiiu-y  may  be  asked  whether 
he  has  in  his  possession  a  ceitain  paper,  in  order  to  lay  .-i  foundation  for  the 
admission  of  secondary  evidence  as  to  its  contents.  Coveney  v.  Tanna- 
hill.  1  Hill  (X.  Y.l  33;  .lackstin  v.  M"Vey.  IS  .Tcdins.  (N.  Y.)  33(X  But  he 
cannot  be  compelled  to  produce  it  or  state  its  contents.    Id. 


•J'J  ATTOUNKY    AM>    <I.1I  NT.  (§    1') 

]>}  till-  ;iltni!if\,  *'  or  wlicif  lie  tlrii\ts  i  II  ft  >iiii:i  I  ioii  l»y  «ilisi'r\;i 
tittii  ■'*■•  or  frniii  iliird  |M-isims.-*"  it  is  mil  |>ii\  ilr^'cd.  'I'lir  i»ii\  ilr^c 
is  for  ilu'  Itrinlit  of  the  <lifnt.  iiol  iii<'  ;ii  ii>nn'_\ .  Il  (•<»iitiiiin's  until 
wjiivfd  Itv  till'  tliriil  ^)\•  his  |irrs(iii;il  !i'|irrsiiii;il  i\t'.-'' '  Il  is  nut 
\\;ii\f(i  iiH  irlv  l>\  MiaUiii;;  tin-  ;iltiirii«v  :i  uiln<ss.  Inil  it  is  \\;ii\(il  if 
tilt"  tliiiit    »'\;iiiiilii-s  liiiii  ;is  to  lln-  |ii  i\  ilr;,'((i    li;i  iiSHt  ions."*'* 

"riof«'ssioM;il  (•oiiiiiiimi<;it  ions  ;in'  not  ]ii-i\  ilf;x<'«l  wlu'ii  sinli  roni 
nmniriitions  ;ii-c  for  ;i!i  unl;i\\fiil  |piir|M)si'.  li;i\in^'  f(tr  ilu-ir  olijcci 
ilif  toiiiniission  of  ;i  ciinn'.  'i'liiv  tin  n  |i;iii;ilxc  of  ilu-  n.-itiin-  of  ;i 
<ons|iii;icy.  of  iit  tciniitrd  ronsjiiriu  y ;  and  il  is  not  only  lawful  1(» 
di\iil:,'f  such  ('oniinunifations.  but.  undrr  siiili  rircunistanti's.  it 
nii;:lil  licroiiir  the  duly  of  the  attornry  to  do  so.  ♦  •  •  'pi,,.  ,.,. 
lation  of  attoiii(\v  ami  dii-nt  rannol  ixisi  for  tlio  ]iiir|ioso  of  coiinsi-l 
in  fonioctinjx  <'i'ini<'H.  The  itrivilc;,^'  d«M's  not  t-xisi  in  such  casos." -*'*' 
This  «'X('t']»lion  ajudios  only  to  foiitcniiilalod  crinifs.  « 'oinniiinica 
lions  with  rrffrcncr  |(»  coiiiplclfd  i  riims  aro  piiv  ilf^Xi-d.-""  It  is  an 
i-ssoiitial  eh'incnt  of  the  i\'^\\{  to  Ix-  difcndod  by  coiinsol.  The  cx- 
(•ojition  is  also  rontiiu'd  to  c-iinii'S.  as  disiiin^znishcd  fi-oni  incfr  civil 
ffauds.-^'     A  second  exception  exists  >sln'rc  the  disclosure  is  ncccs 

2««  Hon.-ic  V.   House,  c.l    Midi.  (;!».  27   N.   W.  S.V.I. 

•J4.1  Croslty  V.  Bcr;:cr.  11  Vii'iav  (N.  Y.)  IJTT;  Hnmdt  v.  Kit-in,  17  Johns.  (N. 
Y.I  :v.\:t:  ("hllllcotlR'  Terry  Vo.  v.  .Taiiicson.  4s  111.  :j.si;  stt)iicy  v.  M'Ncil.  Ilnr- 
jMT  (S.  ('.)  .".."7. 

.:««('r(why  V.  Hcr;.'fr.  11  I';ii;:f  (N.  Y.)  .".77;  lluiitt-r  v.  NNatsmi.  li;  Cal.  .".f.."!; 
<  lallaulHT  V.   Williiinison,  '2'.\  Cal.  :{;n. 

-*■  .M.'clH'Mi,  Ak-  8  ><X'>;  Ilatttm  v.  Rt.ldnsoii,  14  rick.  (Ma.ss.l  41i;.  The  cli- 
ent may  waive.  Chase's  ("a.He,  1  Hhuitl,  Ch.  (Md.)  '2iH\;  I'arker  v.  Carter,  4 
Miiiif.  (Va.)  l.'7:{;  Whitin;:  v.  Harney,  ."{o  N.  Y.  .U'So;  Heiijaiiilii  v.  Cttveiitry.  lit 
Weiiil.  (.\.  Y.I  :U't;  liank  of  I'tica  v.  .Mer.sti-eiiii.  ::  Ilarh.  Cli.  (.\.  Y.i  r,-2'i; 
It.ssler  V.  Schriher.  .'W  111.  172;  rassiiitni-  v  rassinnr.'.  .".o  .Mi.li.  Cji;.  if,  .\. 
W.  17o;    Ilaiiiiltoii  v.  People.  I".*  Mich.  17.'.;    Pt.sler  v.  Hail,  IJ  I'itk.  (.Mass.i  s:i. 

•-«"  \aillaiit  V.  I»o(leiiieail.  'J  Atk    .".U4;    \\aitlrt.ii  v.  Wanl.  .^lyle,  44'.i. 

2««»  People  V.  \'aii  .Vlliiif.  .")7  .Micji.  •;:•,  ll.'l  N.  \V.  .'.'.U.  See,  alsti,  Coveiiey  v. 
Taiinahili,  1  Hill,  .'..t;  Hank  of  Ciica  v.  Mersereau.  .!  IJarh.  Cli.  (N.  Y.)  .VJS; 
Stale  V.  .Mewlierter.  n;  I.iwa,  .ss;  iMulley  v.  Meek.  .*.  Wis.  •_'74;  (Jniluini  v. 
reopl«..  iui  Harh.  (N.  Y.|   iW;    ci.iy  v.  Willi.Miiis,  L*  .Miiiif.  (\:i  i   lo.-,;    'I'v  ler  v. 

I  yier.  rj<;  III.  .-.'_•.-.,  lii  .\.  i:.  r.ic,. 
-   '  1  <; refill.  i:v.  8  i:»o. 

-I  P..iiik    of    I  ilf.'i    V.    .Meisere.'iu,    I".    I'.arh     Ch.    (.\.    Y.i    .".-S;     M.i  \li:iiii    v. 

I'l.ice.  4f;  VI.  4:; I. 


§    1(5)  TKUMIN  \TI()N.  43 

K.irv  |(»  llii-  |ii  ttlcci  i<»ii  (if  llic  :il  I  idiicv's  own  ii;,'Iils,  ;is  wln-i-c  In-  sih-h 
III'  is  sili'd  liv  his  ciifiil.  iiinl  il  Imtoiius  lii;ilri'i;il  Id  slinw  liir  liallJIc 
•)\'  liis  ciiiiildniiciil   III    ihc  insl  riKl  idiis  of  tlir  clioiit.-'** 

10.   TERMINATION. 

Tlic  rrl.ilidii  o(  niinriMv  iiiid  di'iil  iii;iv  !»<•  Ifi'niiii;il  ol  in  ;iiiv  of 
till-  \\;ivs  in  wiiicli  any  oilier  a;,'<ni'v  may  In-  (••iniiiialcd.-''-  lint 
\\\r  ((Mill  may  iiilci  fci  c  to  do  justice  lielwcen  them.  Tlie  atloiney 
Mf  record  caniiol  lie  c!ian;:('d  willionl  leave  of  court, -''^  and  an  al- 
lofuey  can   willidraw   only  liy  lease  of  courl.-'' 

^•■^  Nave  V.  I'.Miid.  11'  Iiid.  :\\S;  .Mii.licjl  v.  I'.ioiiilicr^icr,  L'  Ncv.  .'{-1.".;  Kdcli- 
cstor  City   l'.;iiiU   v.   Siiyd.-nn,  .".   How.    I'l.ic.  (\.   V.i  -J.",!. 

25a  Dentil  of  client.  Adams  v.  Nellis,  .j'.i  How.  I'rac  (N.  Y.)  .■'.HTi.  Tii- 
Icss  (•(lUiilcd  Willi  .-111  liiificsi.  N'iilliaiicr  v.  Ciiv  of  'I dlcdo,  ',','2  W'Uly.  Law 
Hul.  154;  Harness  v.  Stale,  7u  Iiul.  1;  LajianKli  v.  \Vils(jn.  41',  lluu,  i;il»; 
i'U'K'A  V.  Hauiiili('r;jrcr,  IIU  Iiid.  ".."(I,  J>  N.  K.  T<Mt.  A  client  has  the  ri^'lit, 
without  assi;j:nin;,'  any  reason  therefor,  to  (•hanj:e  his  attorney  at  any  time 
on  iiayiiiir  or  secnrim,'  llic  attorney's  U'vs.  In  re  Prospect  Ave.,  S.">  Him.  L'.'iT, 
:'.J  .\.    V.   Sujiii.    ini:;. 

254  Krekeler  v.  Thaiile,  4!>  How.  I'rac.  l.'JS;  Ginders  v.  Moore,  1  liarn.  &  C. 
<m4;  .Teronie  v.  Hoerani,  1  Weud.  (N.  Y.)  2\y.',.  A  substitution  will  uot  be 
|ierinitted  unless  Ihi'  costs  of  tlie  lirst  altorney  have  been  paid.  Witt  v. 
Ani(>s,  11  Wkly.  Kep.  T.'.l.  S  Law  T.  (N.  S.)  -425. 

2. ''5  r.  s.  V.  Curry,  (J  How.  lUG;    Boj'd  v.  Stone,  5  Wis.  1'40. 


WKST    l>UULltiaiN(i    CO.,   PK1.NTER.1  A.^D  STERKOTYrKlW,  8T.  PAUL,  MI.N.f. 


PRINCIPLI' S 


OK    'DIE 


LAW  OF   FACTORS 


A    MONOGRAPH    liV 

EARL  P.  HOPKINS,  A.  B.,  LL  M. 

Author  of  "Real  Property."  Etc 


St.  Paul,  Minn. 

WEST  PUBLISHING    CO. 

1896 


CoPYUuinT,  18'Jti, 

in 

WEST  PUBLISHING  COMPANY. 


FACTORS. 

I.  F.'iclor  Dcliiicd. 

L*.  i;st:iliIisliiiM'iit   of   Krlatlon. 

I?  4.  Implied   I'owtTs  of  Fnctors. 

r>.  Rights  and  Liabilities  of  Factors. 

(t.  Duty  to  Exercise  (Jood  Failli. 

7.  Duty  to  Keep  lMiii(i|i;il   I'dsicd. 

S.  Liability  for  NejiliKcnco. 

II.  Duty  to  Follow  InstrucUous. 
1<>.  Duty  to  Account. 

11.  1  Miiy  iu  Reniirtinp. 

11*.  Del  Credere  Agents. 

1."..  Kiglit  to  CoMunissions. 

11.  Right  to  Reimburs^einent. 

l.'>.  Riglit  to  Indemnity. 

H",.  Lien. 

17.  Rights  against  Third  Persons. 

IS.  Liabilities  to  Third  I'ersons. 

10.  Rights  and  Liabilities  of  Principals  and  Third  Per.sons. 

20.  Termination  of  Relation. 


FACTOR  DEFINED. 

1.  A  factor  or  commission  merchant  is  an  agent  -who 
makes  a  business  of  receiving  and  selling  consign- 
ments of  goods,  usually  in  his  own  name. 

The  following- ai'i'  souk*  dcliniiioiis  of  a  factor  wliich  are  found  in 
the  books:  "A  factor  is  a  specialist  oiiii)lo_vod  to  receive  and  .sell 
floods  for  a  comniission.''  ^  A  factor  is  "an  agent  employed  to  sell 
goods  or  nieicliandise  consigned  or  delivered  to  him  by  or  for  his 
principal  for  a  compensation,  commonly  called  'factorage'  or  'com- 
mission.* "  -     "A  factor  is  an  agent  wlio.  in  the  pursuit  of  an  iiide- 

1  Whart.  .\g.  S  7.".."..    .\  factor  may  receive  a  salary  instead  of  a  commission. 
State  V.  Thompson.  Il2u  Mo.  11.'.  L'5  S.  W.  340. 

2  Stoiy.  Ag.  §  -.VS. 

KAt-TOKS— 1 


2  FACTOItS.  (§    1 

iHiidcjit  calliiiu.  is  ciiiiiloN  rd  l»y  niuitlicr  lo  sell  jirniicrty  lor  liim, 
:iii»l  is  \csl((l  |i_v  ilif  liillcr  willi  liir  |Hisscssi(iii  nr  rtnilrdl  of  llic 
jirojicriy,  or  iuilliorizcd  to  rcrt'i\r  p.iyiiK-nt  ilicicfoi'  fi-nm  the  ])ni'- 
rliiisrr."  •''  The  Icnii  "tniumissioii  iiicrcliMiit. "  ;is  nscd  in  (•oiniiion 
parliiiuc.  iiHMiis  ilic  s.-iiut'  ;is  llic  Ic^al  It'iiii  "fartni'."  '  Tosscssion 
of  the  uonds  with  wliicli  llir  facloi'  deals,  and  aullmiily  In  sell 
llu'in.  arc  essential  lo  llie  (diaracter  of  a  factor.  A  factor  is  dislin 
•mislied  from  a  lu-oUer  cliielly  by  tlie  fact  that  lie  lias  |M>ssession  of 
tile  i^oods.  while  the  lnoker  docs  not:  and  that  the  factor  nsiially 
sells  in  his  own  name,  while  the  luoker  usually  deals  in  the  name  of 
his  iirincipal.'  To  constitute  one  a  factor,  he  must  make  the  sell 
iu^  of  ^M»ods  on  commission  a  re.milai  business.  The  icceipt  and 
sale  of  a  sinirle  c(»nsiiiiiment  would  Ik  insutlicient.  Thus,  under  a 
statute  riMiuirinj;  factors  to  take  out  licenses,  it  is  only  the  jwrson 
who  iuteuds  to  euj^age  iu  the  business  of  a  factor  as  a  source  of 
profit — to  pursue  that  as  a  vocation,  either  alone  or  in  connection 
with  some  otlier  business — who  is  required  to  obtain  a  license. 
Su(  li  a  statute  does  not  make  it  necessary  for  one  who  may  gratu- 
itously assume  the  duties  of  a  factor,  or  who  may  in  one  or  two 
instances  discharge  such  duties,  to  lake  out  a  license."  In  some  cases 
the  term  "factor"  has  been  applied  to  agents  to  purchase  goods;' 
liut  this  use  of  the  word  seems  improper.  A  factor  really  means 
nothing  except  an  agent  to  sell  goods,  though  the  factor  may  per- 
loini  other  duties  for  his  principal  in  addition  to  those  he  performs 
as  factor.^  One  who  puichases  goods  for  a  principal  is  really  a 
broker. 

8  Civ.  Code  Cal.  §  20L'(J;  Civ.  Code  Dak.  §  11G8. 

*  Brickell,  J.,  in  l'erkiu.s  v.  State,  50  Ala.  154,  15G. 

6  Hiiriug  V.  Corrie,  2  Barii.  &  Aid.  137;  IJarberl  v.  Ni'ill.  I'.t  Tex.  143;  Snladiu 
V.  MitcliclJ,  45  111.  7;i;  lli;:;riiis  v.  Muoie,  34  N.  Y.  417;  Slack  v.  Tucker,  li.5 
Wall.  :iJ\. 

0  Terkius  v.  State,  50  Ala.  154. 

7  lirycL'  V.  Brooks,  2tj  Wend.  ;{(;7;    Stevens  v.  Robins,  12  Mass,  Iso, 

«  See  Patterson  v.  Lt-aki'.  5  La.  Ann.  547;  Emerson  v.  Manuliutiiriiig  Co.. 
12  .Mass.  2.''.7.  <  Hie  who  takes  milk  from  I'annurs,  manufactnrcs  it  into  huttir 
and  cIhm'sc,  .-iimI  sells  the  iirddiict,  dedn<'linK  a  certain  compen.sation  pi-r  ponnd, 
is  a  factor.  First  .\al.  Hank  of  K\n\u  v,  Sciiwec  ii.  127  111.  57.'J.  20  N.  E.  CkSI. 
Wlieir  several  <i\vners  of  a  v<'ssel  and  caiKo  ettnstllute  one  of  their  number  to 
transact  the  biisineHs  e«)nneeted   with  the  iiroperly,  lie  is  viewed  as  a   fader. 


^§   3-4)  IMI'MKU    I'OWKIW    OK    FACTORS.  3 

ESTABLISHMENT  OF  RELATION. 

2.  The  relation  of  principal  and   factor   is    established   by 

original  grant  of  authority  or  by  ratification. 

Foi-  llic  csliiblisliniciil  of  tlic  relation  of  i»i-iiici]>al  and  faflor, 
the  samo  rules  are  ai)plic'able  as  in  ordinai-y  eascH  of  aj^ency.  It 
may  arise  by  an  express  contract  of  the  parties;  it  may  be  implied 
from  their  acts;  or  the  principal  may  ratify  the  acts  of  an  unau- 
thorized factor, 
d 

IMPLIED  POWERS  OP  FACTORS. 

3.  A  factor  has  the  folio-wing  implied  powers: 

(a)  To  sell  in  his  own  name  (p.  4). 

(b)  To  fix  the  price  (p.  5). 

(c)  To  sell  on  credit  (p.  o). 

(d)  To  warrant  (p.  G). 

(e)  To  receive  payment  (p.  7). 

(f)  To  insure  (p.  7). 

4.  A  factor  has  no  implied  pow^er: 

(a)  To  barter  (j).  8). 

(b)  To  pledge,  unless  authorized  by  statute  (p.  8). 

(c)  To  delegate  his  authority  (p.  10). 

(d)  To  settle  except  for  payment  in  full  (p.  11). 

Bradford  v.  Kimborlfv,  o  Joluis.  Cb.  (N.  Y.)  431.  The  captaiu  of  a  steamboat, 
selliug  tlour  on  fn'ij;ht,  will  not  be  considered  a  factor  without  express  au- 
thority, or  such  as  is  implied  by  the  usages  of  trade.  Taylor  v.  Wells,  3  Watts 
(Pa.)  U.5;  Rapp  v.  I'almer,  3  Watts  (Pa.)  178.  \\'here  a  person  emploj-s  an- 
other to  sell  goods  and  wares  at  a  distant  place,  agrees  that  the  employe  shall 
receive  a  certain  sum  yearly  and  a  stipulated  portion  of  the  profits  for  his 
services,  and  the  employe  is  to  select  and  rent  a  business  house,  and  employ 
clerks,  and  conduct  the  business,  and  all  rents  and  expenses  are  to  be  paid  out 
of  the  proceeds,  if  sufficient,  but,  if  not,  then  by  the  employer,  the  pei'son  con- 
ducting the  business  is  a  factor.  AViuue  v.  Hammond,  37  111.  OS);  Blood  v. 
Palmer,  11  Me.  414.  A  common  carrier  may  occupy  the  position  of  a  factor  by 
selling  the  goods  he  has  transported  for  the  shipper,  at  the  place  of  destination. 
Kemp  V.  Coughtry,  11  Johns.  (N.  Y.)  107;  Wilhams  v.  Nichols,  13  Wend.  (X. 
Y.)  ."38;  Harrington  v.  McShaue,  2  Watts  (I'a.)  4J3;  Taylor  v.  Wells,  3  Watts 
(Pa.)  05. 


4  FACTO  us.  §§  3-4 

A  factor  is  bouiul  to  conform  to  llic  inslriiciioiis  of  liis  coiisi,t;noi' 
as  to  the  pficc  of  tlir  ariiclo  to  be  sold,  the  terms,  tlic  mode  of  pay- 
ment, etc.*"  l?iit,  in  (lie  altseiice  of  any  iiistriiction.s,  the  consignor 
is  in-esiinied  by  law  to  be  accjiiainted  with  and  to  assent  to  the 
conrse  of  dealinjx  which  is  nsually  practised  at  tlie  same  market  by 
othifs  in  the  same  line  of  business."  A  person  who  deals  in  a  par- 
ticular market  must  be  taken  to  deal  accordin<;  to  the  known,  ^^eii- 
eral.  .md  uniform  custom  or  usaj;e  of  that  market;  and  he  who  ein- 
]>loys  another  to  act  foi*  him  at  a  jtarliciihir  jilace  or  market  must 
be  taken  as  intending'  that  the  business  to  be  done  will  be  done 
according;  to  the  usaj^e  and  custom  of  that  place  or  market,  whether 
the  i>nncij)al  in  fact  knew  of  the  usage  or  custom  or  uot.*^ 

To  Sell  in  His  (hen  Kame, 

Among  the  implied  powers  of  a  factor  is  the  power  to  sell  gooda 
consigned  to  him  in  his  own  name,  without  disclosing  his  princi- 
Iial.^^  This,  as  ah-eady  stated,  is  one  of  the  chief  tests  in  distin- 
guishing a  factor  from  a  broker.^* 

10  Van  Alen  v.  Vanderpool,  G  Johns.  (N.  Y.)  70;  Lelaud  v.  Douglass,  1  Wend. 
(X.  Y.)  4W;  Goodcuow  v.  Tyler,  7  Mass.  30;  Day  v.  Holmes,  103  Mass.  30G; 
Cotton  V.  Hiller,  52  Miss.  7;  Hall  v.  Storrs,  7  Wis.  258;  Osborne,  D.  M.  &  Co. 
V.  Kider,  02  Wis.  235,  22  N.  W.  394.  The  factor  must  sell  within  a  reasonable 
time  after  the  goods  are  received.  Atkinson  v.  Burton,  4  Bush  (Ky.)  21)0.  As 
to  the  place  of  sale,  see  Phillips  v.  Scott,  43  Mo.  80;  Kauft'man  v.  Beaslcy,  54 
Tex.  503;  Wallace  v.  Bradshaw,  G  Dana  (Ky.)  382;  Grieff  v.  Cowguill,  2  Disn. 
(Ohio)  58.  Where  a  consignment  is  made  to  a  commission  merchant  for  sale 
without  instruction,  in  the  absence  of  an  establislied  usage  to  the  contrarj',  of 
wliicli  the  consignor  has  or  nuist  be  presumed  to  liavo  knowledge,  the  con- 
.signee's  authority  to  sell  is  limited  to  the  place  to  wliirh  tlie  consignment  wa.s^ 
originally  made.    Burke  v.  Frj'e,  44  Neb.  223,  02  N.  ^\'.  470. 

11  Dwight  V.  Whitney,  15  Pick.  (Mass.)  179;  Randall  v.  Kclili.r,  0(t  Me.  37; 
Ka\i(Tiii;in  v.  Beasley,  .54  Tex.  .503. 

12  Bailey  v.  Bensley,  S7  111.  5.5(j;  Stoiy,  Ag.  S§  <"'<•,  '.m's  VX)\  1  Ciiit.  ("oiU.  dllh 
Am.  Ed.)  83;  Sutton  v.  Tatham,  10  Adol.  &  E.  27;  Bayliffe  v.  Butterw.nth,  1 
Welsh.  H.  &  (}.  42S;  Lyon  v.  CuIlMTt.son,  S3  111.  :V.\\  T'nltcd  Stales  Life  \\\s.  Co. 
\.  Advance  Co.,  SO  111.  .5  to. 

>3  (Jraham  v.  Diickwall,  S  I'.ush    (Ky.l   12;    .Johnston  v.  I'sltoiiic,   II   .Vdol.  ^S: 
E.  540. 
1*  Baring  v.  Corrle,  2  P.arn.  i:  Aid.  l.!7;   ante,  \).  2. 


§§    3-4)  IMPLIED    TOWERS    OF    FACTORS.  5 

To  Fix  the  Price. 

The  <(»nsi^nni('iit  of  j^oods  to  u  factor  foi-  sale,  williout  Hpccial 
insti'iH'tioii.s  as  to  the  i)rice  for  wliicli  lio  shall  sell,  confers  \\\v)\\ 
him  the  rifiht  to  use  his  own  judj;nieut  as  to  what  olTers  lo  accej^t, 
and  the  probable  chanj^es  in  the  market/'^  A  sudden  fallinj^  olf 
of  the  market  after  the  goods  are  received  does  not  alter  the  case, 
and  the  factor  may  sell  without  waiting:  for  instrufttions.*"  lie 
may  even  sell  for  less  than  tlie  amount  he  has  advanced  to  the  prin- 
cipal on  the  goods,  and  recover  the  ditference  from  the  principal.'^ 
The  i)rincii)al  may,  of  course,  fix  the  price,  and  then  the  factor  must 
follow  his  instructions.^^ 

To  Sell  0)1  Credit. 

A  factor  has  implied  power  to  sell  goods  on  a  reasonable  term  ot 
credit.^"  He  must,  however,  exercise  the  care  that  a  reasonably 
prudent  business  man  would  use,  and  not  extend  credit  to  irre- 
sponsible persons.^*^  A  factor,  however,  has  no  authority  to  give 
credit  against  the  express  instructions  of  his  principal,'-^ ^  or  wlien 
the  usage  of  the  trade  is  to  sell  for  cash  only.--      When  a  factor 

15  Adams  v.  Capron,  21  Md.  ISC;    Conway  v.  Lewis,  12U  Pa.  St.  215,  13  Atl. 
821};   Given  v.  Lemoine,  35  Mo.  110. 
i«  Adams  v.  Capron,  supra. 
IT  Given  v.  Lemoine,  supra. 

18  See  post,  p.  15.  Letters  of  instruction  from  a  mercliaut  to  his  factor,  ac- 
compiinying  a  consisnment  of  goods,  not  expressly  fixing  the  minimum  price 
of  tlie  goods,  but  merely  expressing  an  expectation  that  the  goods,  on  account 
of  their  superior  quality,  would  readily  command  a  certain  price  named,  will 
not  be  construed  as  fixing  the  minimum  price;  and  if  the  factor  sell  for  a  less 
price  than  the  one  named,  in  good  faith  and  without  negligence,  he  Avill  not  be 
liable  in  damages.    Yianna  v.  Barclay,  3  Cow.  (N.  Y.)  281. 

19  Van  Alen  v.  Yanderpool.  G  Johns.  (N.  Y.)  09;  Robertson  v.  Livingston,  5 
Cow.  (X.  Y.)  473;  (Joodenow  v.  Tyler,  7  Mass.  3lJ;  Hapgood  v.  Batcheller.  4 
Mete.  (Mass.)  .570;  M'Coiinico  v.  ("urzcu.  2  Call  (Va.)  35S;  Pinkham  v.  Crocker, 
77  Me.  503,  1  Atl.  827. 

20  Pinkham  v.  Crocker,  77  Me.  .503.  1  Atl.  827;  .Tames  v.  M'Credie.  1  Bay 
(S.  C.)  204. 

21  Hall  V.  Storrs,  7  AVis.  253;  Bliss  v.  Arnold.  8  Vt.  252;  .Tohnson  v.  Totten, 
3  Cal.  .343. 

22  Kauffman  v.  Beasley,  54  Tex.  503;  Harbert  v.  Neill,  49  Tex.  143;  Xeill  v. 
Billiugsley,  Id.  101. 


G  KACTOHS.  (§§    3-4 

srlls  on  credit,  lie  iiia.v  take  iici^ntiaMc  ]K\\n'V  pa.vaMc  to  liimsclf.-* 
If  tin*  iiiakt'i- of  tlio  pajxT  hfcomcs  ins(>lvciit,  the  fadoi-  is  not  liable 
for  tho  loss  if  he  has  exorcised  due  care.'-*  I5nt,  if  the  factor  dis- 
counis  such  iiaitei'  for  liis  own  aecomuiodal  i(Ui.  he  l>fC(»nii'S  liable 
for  any  loss  which  occurs^"'  thou^ih  he  lias  iiui)lied  jMiwer  to  discount 
paper  f<u'  his  ju-incipal.'-'"  A  factor  may  also  sell  the  ^oods  of  dif- 
fei-eni  ]>riiH'iiials  in  one  sale,  and  take  a  note  for  the  whole  sum 
from  ihe  purchaser  payable  to  himself.-' 

7(>   Wiirrant. 

Tlu*  nsaj^e  of  trade  jienerally  gives  a  factor  power  to  warrant  the 
(pmlity  of  the  goods  he  sells.-**  IJut  the  warranty  must  be  a  rea- 
sonable one.  Thus,  it  has  been  held  that  there  is  no  imitlieil  au- 
thority to  warrani  ihat  Hour  will  keep  sweet  during  a  long  sea  voy- 

23  lUit  wliere  there  was  a  sale  on  credit,  and.  at  the  expiration  of  the  term 
of  credit,  the  factor  took  a  uote  payable  to  himself,  he  was  held  personally 
liable.    Hosmer  v.  Keel)C,  2  Mart.  (N.  S.)  ^(IS. 

24  Goodenow  v.  Tyler,  7  Mass.  30;  Gorman  v.  "Wheeler,  10  Gray  (Mass.)  'MVl; 
Leech  v.  Beardslee,  22  Conn.  404;  Greely  v.  Bartlett,  1  Greeul.  (Me.)  172.  As  to 
the  dili},'euce  he  must  use  iu  collecting  notes,  see  Folsom  v.  Mussey,  8  Greenl. 
(Me.)  400.  All  such  notes  belon:;  to  the  principal,  and  do  not  pass  to  the  factor's 
assipnee  in  bankruptcy.  Kip  v.  Bank,  10  Johns.  (N.  Y.)  03;  Messier  v.  Amery, 
1  Yeates  (Pa.)  533;   Thompson  v.  Perkins,  3  INIason,  232,  Fed.  Gas.  No.  13,972. 

25  Morris  v.  Wallace,  3  Pa.  St.  319;  Myers  v.  Entriken,  0  Watts  &  S.  (Pa.> 
44;  Johnson  v.  ollara,  5  Leigh  (Va.)  450. 

26  Greely  v.  Bartlett,  1  Greenl.  (Me.)  172. 

27  Roosevelt  v.  Doherty,  129  ^lass.  301;  Chesterfield  ^lanufg  Co.  v.  Pehon. 
r>  Pick.  (>Lass.)  7;  West  Boylston  Manufg  Co.  v.  Searle.  15  Pick.  (Mass.)  225; 
Ilapgood  V.  Batcheller,  4  Mete.  (>Lass.)  573;  ILamilton  v.  Cunningham.  2  Brock. 
;!.".0,  Fed.  Cas.  No.  5,978;  Codies  v.  Cunnning,  0  Cow.  (X.  Y.)  ISl.  But  see 
SOtry.  Ag.  §§  179n,  204a.  Where  a  commission  merchant  takes  a  bond  for  a 
simple  contract  debt  due  to  him  for  goods  sold  on  commission,  and  includes 
in  the  same  instrument  a  debt  due  to  himself,  he  makes  himself  answerable 
to  his  princii)al  for  the  amount  of  the  goods,  as  he  has  deprived  him  of  the 
means  of  pursuing  his  claim  against  his  debtor,  by  extinguishing  the  debt  due 
by  simjtle  contract.  Jackson  v.  Baker.  1  Wash.  C.  C.  3'.M.  Fed.  Cas.  No.  7,120. 
.\nd  cf.  Johnson  v.  O'llara.  5  I>eigh  (^'a.)  450. 

■-•»' Schuchardt  v.  Alh-iis,  1  Wall.  ;',50;  Woodford  v.  Mc(  l.n.ilian.  0  111.  S.->; 
lpt<in  V.  SnlTolk  «'o.  Mills.  11  (ash.  (.Mass.)  5X0;  Smith  v.  Tnicy.  30  N.  Y. 
70;  Nelson  v.  Cowing.  0  Hill  (.\.  V.i  "..''i'.;  .\ndrews  v.  Kiuclaiid,  <!  Cow.  (N. 
Y.)  354;  liradford  v.  Bush.  10  .\la.  :\s\\\  IliuUer  v.  .lanicsoii.  c,  licil.  (N.  C.)  252. 
r.iU  see  Argcrsinger  v.  Mac.Xaiiglilun  (N.  V.  .\pi')  -1  N.  i:.  Hil-j. 


§§    3-4)  IMIMIKI)    I'OWKUS    OK    FA(T()KS.  7 

jijic;-"    nor  (o   \v;iri-;nil   n^aiiisl    ;^i;iluiloiis  and   iiinvan-imlaldc   in- 
terferences witli  the  subject  of  tlie  sale.'"' 

To  RcceU'e  I'll ij lilt nt. 

A  factor  has  power  to  receive  paynienl  for  I  lie  goods  s(dd  by 
liini,  since  lie  is  in  |)OSsession  and  inxcsled  with  all  tlie  indicia  of 
ownership.  lie  may  receive  payment  at  the  timi'  of  the  sale,  or 
snl)se(inently  if  the  sale  was  on  credit.'^ 

To  Inmire. 

It  is  the  settled  law  that  factors,  having  the  goods  of  their  jnin- 
cipal  in  their  ])ossession,  may  insnre  them;  ^-  but  they  are  not 
bound  to  do  so,  unless  they  have  received  orders  to  insure,  or  prom- 
ise to  insure,^^  or  the  usage  of  trade  or  the  habit  of  dealing  be- 
tween them  and  their  principal  raises  an  obligation  to  insure.^* 
And  if,  in  any  of  the  cases  mentioned,  the  agent  neglect  to  make 
the  insurance,  he  is  himself,  by  the  custom  of  merchants,  to  be 
considered  as  the  insurer,  and  liable  as  such  in  the  event  of  loss, 
in  which  case  he  is  entitled  to  credit  for  the  premium  which  should 
have  been  paid.-'°  A  factor  may  Insure  in  his  own  name;  ^"  and  if 
he  does  so,  and  a  loss  occurs,  he  can  recover  the  full  value  of  the 
goods.^^ 

29  Upton  V.  Suffolk  Co.  Mills.  11  Cush.  (Mass.)  586. 

30  As  where  whisky  was  sold  with  a  warranty  against  seizure  for  violation 
of  the  revenue  laws.    Palmer  v.  Hatch,  40  Mo.  ."iS."). 

31  Lumley  v.  Corbett,  18  Cal.  494;  Rice  v.  Groffmann,  5G  Mo.  434;  Drinkwa- 
ter  v.  Goodwin,  Cowp.  2.j1,  256. 

32  Brisban  v.  Boyd,  4  Paige  (N.  Y.)  17;  Lee  v.  Adsit,  37  N.  Y.  78;  De  Forest 
V.  Insurance  Co.,  1  Hall  (X.  Y.)  94;  Schaeffer  v.  Kirk,  49  111.  2.11;  Shoenfeld 
V.  Fleisher,  73  111.  404.  That  the  factor  cannot  insure  in  a  mutual  company, 
see  White  v.  Madison,  26  N.  Y.  117. 

33  Lee  V.  Ad.sit,  37  N.  Y.  78;  Shoenfeld  v.  Fleisher,  73  111.  404;  Aetna  Ins. 
Co.  V.  Jack.son,  16  B.  Mon.  (Ky.)  242;    Duncan  v.  Boye,  17  La.  Ann.  273. 

34  Area  v.  Milliken,  35  La.  Ann.  11,50;   Gordon  v.  Wright.  29  La.  Ann.  S12. 

35  De  Tastett  v.  Crousillat,  2  Wash.  C.  C.  132,  Fed.  Cas.  No.  3,828;  Gordon 
V.  Wright,  29  La.  Ann.  812;  Shoenfeld  v.  Fleisher,  73  111.  404;  Waters  v.  As- 
surance Co.,  5  El.  &  Bl.  870. 

•"•6  Brisban  v.  Boyd,  4  Paige  (N.  Y.)  17;  .Tohnson  v.  Campbell,  12o  Mass.  449; 
Sargeant  v.  Morris,  3  Barn.  »S:  Aid.  377;    Upsaricha  v.   Noble,  13  East,  332. 

37  Brisban  v.  Boyd,  4  Paige  (N.  Y.)  17;  Ballard  v.  Insurance  Co.,  9  La.  2.58. 
A  factor  who  has  insured  his  principal's  goods  at  the  latter's  expense,  and  col- 
lected the  insurance  on  their  being  damaged  by  fire  while  in  his  pos.session,  is 
liable  to  his  principal  for  the  amount  collected,  with  interest  from  the  time 


S  KAtTDlJS.  (§§    ^— i 

To  Barter. 

A  factor  has  im  iiiipliol  pown-  (o  bartor  or  oxchan^n"  tlic  •^oods 
<'oiisi<:nr(l  to  him  fur  other  ^oods.  If  hr  (hu-s  so,  no  lilh'  to  the 
l.id|n'riy  passts.  ami  tin-  iniiirijiai  iiia.v  rrco\rr  liir  ^ootls.  tlituii^li 
ilic  person  tlcaiiiii:  \sitii  tiif  facttn  saitposcd  ilif  laittr  lo  l>f  llic 
owner.  '"* 

Aiilion<:li  a  factor  or  l>rol<er  lias  a  iieii  on  liis  principal's  ^^mmIs  foi- 
advances  made,  yet  at  commi»n  law  he  cannot  p]i'<l;:e  ihem.'" 
When  ;,mhm1s  are  so  attenii)ted  to  he  i)le<l^M-d,  the  title  and  ii;;ht  of 
pro|MMty  of  the  owner  are  not  diveste<l  by  his  own  act.  or  by  his 
anthority.  The  factor  has  anthority  \o  sell,  and  a  sale  i)asses  a 
«;ood  title  from  the  owner.  \\\\\  the  factor  has  no  anthority  to 
lded<;e  jjoods  consi^'iieil  to  him.  His  acts  iittcmptiui;  to  do  su  are 
void,  aud  vest  uo  title  iu  the  pledijee."*" 

payment  is  demanded  of  him,  even  tliou;;li  there  was  no  eontraet  l)etween  them 
as  to  insurance.  Fish  v.  yeeberger,  47  111.  App.  r>SU,  alHruicd,  ^'J  N.  E.  1»S12, 
l.")4  111.  30.  A  promise  by  a  factor  that  he  would  write  to  his  principal  to  get 
insurance  done  does  not  bind  the  principal  to  insure.  It  is  a  personal  enjiafe'e- 
mcnt  of  tlie  factor,  for  whicli  tlie  principals  are  not  liable.  Randolph  v.  Ware, 
3  Crauch,  r>o3. 

3t.  Wlieeler  &  MauufacturiuK  Co.  v.  C.ivan,  <"..".  .Mo.  S'.t;    Win^'  v.  Ncal   (Me.) 
*J  .\tl.  S81;   Guerreiro  v.  Peile,  3  Barn.  &  Aid.  (iU;;    Victor  Sewinj;  Mach.  Co.  v. 

llcller.  44  Wis.  li<M  (under  factors'  act). 

•"  Kennedy   v.    Strong.   14  .l(ilin.>^.    (N.    \^    ll'T;     Itoiliigucz   v.    IlcO'erman,   "> 
.lohus.  Ch.   (N.    Y.)   417;    .Ncwl.ol,!    v.    Wright,   4    llnwlc   tl'a.)   1".>.'.;     Ivindcr   v. 

Siiaw,  li  Mass.  3"J7;    dray  v.  Agncw,  'J.'>  111.  ;'.l.".;    Kelly  v.  Sniitii,  1  Hlatchf. 

IJ'.M).  r..<l.  Cas.  No.  7.(;7."»;    Van  Anuinge  v.  Teabody,  I  Mason.  440.   Fed.  I'as. 

N...  ic,.s_-.-,;    Insurance  Co.  v.  Kiger,  103  U.  S.  \\r:i;    Warner  v.  Martin.  11  How. 

•Jos;    First  Nat.  Hanlc  of  Macon  v.  Nelson,  3H  (Ja.  3i>l;    Wright  v.  Solomon,  li) 

i'mI.  r,4;    .MtTchanl.s"  N:il.  I^iiiil;  of  .Mfinphis  v.   Tnniiolni,  VI  llcislc.  (Tciiii.t  .V_»0; 

M<-Crcary  v.  (laincs.  :..".  Tcx.  4s.'i;    Falcrson  v.  Tasli.  -J  Siiangc.   117S;    Dan- 

tdgny  V.  Duval,  .">  Term  U.  004;    Ncwsom  v.  'fiiornloii,  C  lO.-ist.  17;    Craliam  v. 

Dystcr.  '1  Starkh',  lil;    Martini  v.  Coles.  1  .Manic  vV  S.  t  pe,    Shipley  v.   Kynicr. 

Id.  4M;    Solly  V.  Kathbonc.  '1  Manic  \-  S.  LMIS;   Cockian  v.  Irlain,  Id.  ."'.ot.  not.-; 

I'.oyson   v.   Cohs.   <;   Mnule   \-    S.    It;     Fichling   v.    Kymer.   '1    I'.rod.   \-    H.   <;.".',e. 

i^ueiroz  V.  Tnicman.  :'.  Harn.  iV  C.  .WJ;    llouito  v.  Mos(picra.  1!  Hosw.  (N.  Y.) 

tot.     Hut  cf.  Hutchinson  v.  Hours.  <",  C:il.  .•'.SI;    Led  v.  Wa.lsworth.  .'.  Cal.  KM; 

Wright  v.  Soh.mon.  1J>  Cal.  CI;    Mill.r  v.  Srhneidcr.  in  1.,m.  Ami.  .".oo:    M.Cnary 

V.  <;aineH.  .V.  'fcx.  4S.'i:    l-'lrsl   Nat.  Hank  v.  .Nelson.  :{S  <;m.  :101. 
<"]iclTn»au  v.  Nolde,  G  Melc.  (.Ma.ss.)  lib.    The  factor,  however,  ciiimot  ttls- 


§§    3-4)  IMII.IKD    POWKUH    OF    KAcTOItS.  9 

The  I'i^^-^Iils  of  (lie  priiicijcil  and  f;u"fnr  (Icjicnd  on  flu-  I;i\v  iikt- 
olianl,  wliich  has  bt'cn  adoplcd  l»y  the  coiiiiiion  law.  IJy  I  his  law 
a  factor'  is  hut  tlic  alloriicy  of  his  jn'iiuijcil,  ;iii(l  In-  must  pursue 
(he  powers  (l<'h';,s-|Ir<l  lo  liiiii."  'i'hc  paitv  ircciviii;,'  such  a  |>h'(l^»', 
and  ad\aiiciM^'  iiis  nioin-y,  acipiiics  no  title,  as  aj^ainst  the  jdinci- 
])al.  \or  is  it  material  in  such  a  case  wliether  the  pled^^n-e  knew 
that  lie  was  dealin;;  witli  a  factof  or  not.  If  he  knew  the  fact,  lie 
was  hound  to  know  that  by  law  the  factor  hail  no  autli<ti-ity  to 
j»led^e  the  j^oods  of  his  principal.  If  he  did  not  know  that  the  |)er- 
son  with  whom  he  was  dealiii}^  was  a  factor,  still  his  want  of  knowl- 
edge of  this  fact  oonld  not  extend  tiie  authoiity  of  the  factor.  As 
such  an  a<t  is  not  within  the  ordinary  powers  of  a  factor,  it  is  clear 
that  it  cannot  work  a  di\'estiture  of  the  title  of  the  principal;  and 
be  may  pursue  the  <,n)ods  in  the  hands  of  the  pledgee,  or  may  bring 
trover  against  both  tiie  pledgee  and  factor,  or  either  of  liieni,  at 
his  election.'* - 

But  a  factor  may  deliver  the  possession  of  goods  on  which  4ie  has 
a  lien,  to  a  third  person,  with  notice  of  the  lien,  and  with  a  declara- 
tion that  the  transfer  is  to  such  person  as  agent  of  the  factor,  and 
for  his  benefit.  This  is  a  continuance,  in  effect,  of  the  factor's  pos- 
session,"*^ 

Same — Statutory  Power  to  Pledge, 

In  a  number  of  states,  however,  the  rules  of  the  common  law 
as  to  factors  have  been  changed  by  statute.^ ■*     These  enactments 

afflrui  the  pk'djre  ou  the  ground  that  he  had  uo  authority  to  make  it.  Bott  v. 
McCoy.  20  Ahi.  578. 

*i  Kiuder  v.  Shaw,  2  Mass.  3'JS;   McCreary  v.  Gaiues,  55  Tex.  485. 

*2  Bott  v.  McCoy,  20  Ala.  578;  Kinder  v.  Shaw,  2  Mass.  397;  McCrearj*  v. 
Oaines,  55  Tex.  485;  Phillips  v.  Huth.  ti  Mees.  &  W.  572,  59G;  Martini  v.  Cole.s, 
1  Maule  &  S.  140;  Baring  v.  Corrie,  2  Barn.  A:  Aid.  137;  McCombie  v.  Davies, 
C  East,  538.    But  see  Ilutehiusou  v.  Bours,  0  Cal.  ;^84;   Storj-,  Ag.  §  437. 

*3  rniuhart  v.  M'lver,  4  .Johns.  (N.  Y.)  103;  Laussatt  v.  Lippiucott,  0  Serg. 
&  K.  (Pa.)  440;  Bowie  v.  Napier.  1  McCord  (S.  C.)  1;  Blair  v.  Childs,  10  Heisk. 
(Tenn.)  199;  First  Nat.  Bank  of  Louisville  v.  Boyoe,  78  Ky.  42.  Contra.  Mer- 
<'liants'  Nat.  Bank  of  Memphis  v.  Trenliolm.  12  Heisk.  (Tenn.)  52o. 

4*1  Stim.  Am.  St.  Law.  §§  4380-4385.  New  York.  2  Rev.  St.  1875.  p.  11(38. 
?§  1,  5;  3  Rev.  St.  1SS2.  p.  2257.  Ohio,  1  Rev.  St.  1880.  §§  3214.  3218.  Mas.'^a- 
<'husetts.  Gen.  St.  18f>0.  c.  54;  Pub.  St.  1882.  c.  71.  Pennsylvania.  Bright.  & 
Purd.  Dig.  1873,  p.  tiC.4.    Wisconsin,  Rev.  St.  1878,  pp.  854,  855,  §§  3345-3.347. 


10  FACTORS.  (§§    •'^-4 

make  it  imssiMc  foi-  jxTstnis  <Ir:iliiiu  wiili  facidis  to  lakf  jiIimIucs  of 
i:o«t(ls  licid  l»y  the  latter,  and,  It.v  so  doiiij^,  'Uiiuirc  rij^lils  superior  to 
those  of  tile  owner,  who.  l»_v  phieiiii:  (he  |)i'oi»erty  In  the  faclor's 
hands,  cleihes  him  with  ajipafeiit  dwnership.  If  the  iihd^ee  takes 
the  ;;(H»ds  knowini:  that  the  jih-dmir  liohls  them  as  a  factor,  then 
the  jiledj^e  is  suhjecl  lo  the  lights  of  the  nwner.  'I'he  statnles  arc 
desii^ned  nUTely  fnv  the  piotection  of  Imna  tide  ple<l};ees.*''  Nor,  on 
till-  (iiher  hand,  is  the  faclof  i;i\en  any  fi^^hl  lo  pledge  his  piinci- 
pal's  j;o(»ds  without  (he  hi((er"s  consent.  The  owner  may  maintain 
an  action  against  tlie  factor  for  llic  tort."'  The  factor's  acts,  as 
they  are  calh'd.  ajijily  in  most  of  tlie  states  oidy  to  factors  to  whom 
the  ^M)ods  are  consij^ned  for  sah',  and  not  to  nieiv  consijjnees.*' 
The  owner  may,  in  all  cases,  recover  the  floods  i>led;;ed,  by  [>aying 
ilu-  amount  which  the  pledgee  has  advanced. 

Ti'  Ui-h/jafe  Aiithority. 

The  mere  existence  of  the  relation  of  principiil  and  factor  <z:ives 
the  latter  no  imi)lied  iK)wer  to  delegate  the  authority  conferred 
upon  him.  A  principal  having  imposed  trust  and  contidence  in  the 
ability  and  integrity  of  the  factor  himself,  the  factor  must  perform 
his  duties  in  person,  and  not  turn  them  over  to  subagents.*^  Mere 
mechanical  duties,  re(piiring  no  exercise  of  discretion,  need  not  be 
performed  by  the  factor  himself;  and  a  usage  of  trade  may  justify 
a  delegation   of   authority    by    incorp(»rating   into    the   contract    an 

.Maryland,  Rt-v.  Code  ISTS,  pp.  2l>],  liUli,  li'J4,  §§  3,  5,  G,  14.      Khode  Island,  (Jeu. 
St.  1872,  p.  2G1,  e.  VIW;    Pub.  St.  ISNli,  c.  13G.    I>ouisiaua,  Act  tS74,  No.  Iki. 

*'"  St.  Louis  .Nat.  I'.aiiU  v.  Ross,  '.)  Mo.  .\pp.  31)1);  lOvans  v.  TriU'iiiau,  1  Muody 
A:  K.  lU. 

*o  Stollcnwcrik  v.  'riiadicr,  lir>  .Mass.  'I'lA. 

^T.icnuings  v.  Merrill,  JU  ^^■l■ud.  (N.  Y.)  I);  Stevens  v.  Wilson,  n  Hill  (N.  Y.> 
T)VJ.;  id.,  :i  Denio  (N.  Y.)  4Tli;  Cartwrij;lit  v.  Wiliiu  idinj,',  124  N.  Y.  yiV,  First 
.Vat.  Hank  of  Toledo  v.  Sliaw.  Gl  X.  Y.  l.'s:5;  Kiiisey  v.  Le^Kclt,  71  N.  Y.  387; 
llowlaiid  v.  WoodnitT,  Go  N.  Y.  7li;  ( "liica^'o  Taylor  Print  in;;  Press  Co.  v. 
I...\\<11,  c,(i  C;!].  i.-,i;  .Mckcrson  v.  l>.nrnw.  .".  Allni  (Mass.)  ll'.t;  Siollniwcrck 
v.  Thaclier,  It.".  .Mass.  Iili4;  Cole  v.  .North wtstern  Rank.  L.  U.  lo  C.  P.  :io4; 
Fuciitcs  v.  .Montis.  L.  K.  3  C.  P.  ."IGS;  Id..  L.  U.  4  C.  P.  !>3;  .lohiis.iii  v.  Credit 
LyonnalH,  1'  ('.  P.  Div.  li'J  I ;  I'icUrriiiu'  v.  HiisU.  l.">  I'last.  '.\S\  PdysKii  v.  Cole.s, 
G  .Maulc  &  S.  14;    h.ver  v.  I'larsi.n,  ;'.  l'.nrn.  iS;  C.  :;s. 

<•' Warner  v.  .Martin.  11  How.  liU'J;  Mereliant.s"  .Nai.  P.aiik  of  .Miiiipliis  v. 
TrfnlKdiii,  VI  llcisk.  (Tenii.;  :>'H). 


§§  3-4)  iMi>i.ii;i)  rowKKs  of  kactors.  11 

iiujilicd  iKiwcr  lo  (|clt'-;al('.'"*  So,  a  principal  iiiav  confer  (he  iHiwcr 
of  dolt'j^ation  or  substitution,  either  expressly  or  impliedly,'"  or 
may,  after  (Iclej^^ation  by  the  ap^ent,  ratify  or  cftnfinii  the  same,  iu 
suoli  manner  as  to  make  the  subajient  responsible  dii-eetly  to  the 
l>rinci|tal;  but  (he  fad  llial  llic  principal  knows  that  a  siiba;;eMt 
or  factor  will  be  empbtyed  does  not  relie\e  the  liability  of  the  aj^fut 
to  the  principal. '^^ 

To  Settle  except  for  Payment  in  Full. 

As  already  seen,  a  factor  may  sell  on  credit,  and  receive  payment 
according-  to  the  terms  of  the  credit,  but  that  is  tlie  limit  of  liis 
power.  A  factor  lias  no  liower,  unless  authorized  by  his  prin<Mpal, 
to  receive  payment  for  goods  sold  in  anythinj;  but  money.  lie  can- 
not take  depreciated  currency;  °-  nor,  as  already  seen,  can  he  ac- 
cept other  goods  in  payment,  for  that  would  be  an  exchange  or 
bartt'r.-'"''  So,  a  factor  cannot  sell  his  principal's  goods  in  x>ayment 
of  his  own  debts,°*  even  when  there  is  a  balance  due  him  from  the 
principal. ^^  lie  has  no  power  to  compromise  the  claim  of  the  prin- 
cipal.^°  A  factor  cannot  bind  his  principal  by  submitting  to  arbi- 
tration a  controversy  arising  out  of  a  sale  made  by  the  factor;  for  in- 
stance, a  claim  for  damages  arising  out  of  an  alleged  breach,  of  an  im- 
plied warranty  of  the  quality  of  the  thing  sold.^"  When  a  factor 
has  sold  goods  on  credit,  he  has  no  implied  power  to  extend  the 
time  of  payment. ^^ 

49  Harralson  v.  Stein,  ~)0  Ala.  o47;  Johnson  v.  Cunningham,  1  Ala.  249; 
Planters'  &  Farnieis'  Nat.  Bank  v.  First  Nat.  Bank,  75  X.  C.  534.  A  factor 
cannot  deluge  the  selling  of  goods  intrusted  to  him  to  his  clerk.  Warner  v. 
Martin,  11  How.  224;  Loomis  v.  Simpson,  13  Iowa,  532;  Combes'  Case,  'J  Coke, 
75,  70a. 

50  Campbell  v.  Reeves,  3  Head  (Teun.)  22G;  Loomis  v.  Simpson,  13  Iowa, 
532;   Combes'  Case,  9  Coke,  75. 

51  Loomis  V.  Simpson,  13  Iowa,  532. 

52  Sangston  v.  Maitland,  11  Gill  &  .1.  (Md.)  28(5;  Underwood  v.  Nicholls,  17 
C.  B.  239.    But  see  Greenleaf  v.  Moody,  13  Allen,  3ti3. 

53  Ante,  p.  8. 

54  Warner  v.  Martin,  11  How.  2U9;  Benny  v.  Rhodes,  18  :Mo.  147;  Holtnu  v. 
Smith,  7  N.  H.  440. 

5  5  Benny  v.  Pegram,  18  Mo.  191. 

56  Russ.  Merc.  Ag.  48.    But  see  West  Boylston  Manufg  Co.  v.   Searle,   1.5- 
Pick.  (Mass.)  225. 
5  7  Carnochan  v.  Gould,  1  Bailey  (S.  C.)  179. 
5s  Douglass  v.  Bernard,  Auth.  N.  P.  278. 


12  FACTOKS.  (§    6 

RIGHTS   AND  LIABILITIES  OF  FACTORS. 

6.  The  rif^hts  and  liabilities  of  factors  will   be    considered 
under  the  following  heads: 
(at  Tuty  to  exercise  good  faith  (j).  12). 

(b)  Duty  to  keep  principal  posted  ([).  13). 

(c )  Liability  for  negligence  (p.  11). 
(d>  Duty  to  follow  instructions  ( ji    1.')). 

(6  1  Duty  to  keep  and  render  accounts  ([).  19). 

(f  i  Duty  in  remitting  (p.  22). 

(g)  Del  credere  agents  (j).  23). 

(h)  Right  to  commissions  (p.  27). 

(i)  Right  to  reimbursement  (p.  28). 

(j)  Right  to  indemnity  (p.  29). 

(k)  Right  to  a  lien  (p.  30). 

(1 )  Rights  against  third  persons  (p.  37). 

(m)  Liability  to  third  persons  (p.  39). 

SAME— DUTY  TO  EXERCISE  GOOD  FAITH. 

6.  A  factor  must  exercise  the  utmost  good  faith  in  all  his 
dealings  w^ith  his  principal. 

<"iiM)(l  fjiiili  is  tlu'  i»;u;nu()uiit  and  vital  ]>rinci])le  of  tho  law  j;(>\- 
t^rninj;  tlu'  relation  of  }»rinci]>al  and  factor,  (lood  faith  must  Ik' 
exoirisod  by  the  factor. in  all  his  dcalinj^s  with  the  principal's 
floods.  The  factor  is  not  permitted  to  make  any  profit  ont  of  his 
a;,'en(v  hcynnd  liis  Ic^iiiniale  commissions.""  lie  caiiiiot  jnirchase 
for  himself  the  <ioo<is  consigned  to  him  for  sah*,  except  with  the 
know  Icdj^c  and  consent  of  his  ])rincipal  upon  a  full  disclnsiire  of 
ihc  circiiiiistances  siirrfniiHliiij^;  the  transaction,  and  a  total  altsrnce 
of   all   fraud    and    concealment.''"      If   lie   should    purchase    witiiout 

68  KciKlil<r  V.  Miiinitiicliiiiii^'  Co.,  fj  Mil.  .".s."'.;    ICvnns  v.  I'ottcr,  '2  CmII.   1-. 
I'fd.  Cms.  No.  4,."j<li>;    l{;ilti(jck  v.  (Uiiisoii,  L'.'t  liul.  T.'i;    Slmw  v.  Simu',  1   Cusii 
(Ma.ss.)  li^S;    Clnrku  v.  'I'ippinu,  1)  Hcuv.  L'S-l.    Tlie  niaiiiii^'  of  advances  l»y  the 
fa<t«jr  d(U's  not  cliaiiKc  tlif  rule.     Ki<t'  v.   Hrook,  liO  Fed.  C.11. 

«"  Kcl>:lilt'r  V.  Manufacturlii;;  Co.,  12  .Md.  'AS'A.  So,  lie  caiuint  ad  as  a^'ciil 
for  thu  purcLa.ser.    Bcuslcy  v.  Moon,  7  111.  Aiip.  ll."»;   Tahutl  v.  Cliew.  L'T  I'nl. 


§    7)  FACTOU'S    DUTY    TO    KKKP    PUIXCirAI,    TOSTED.  13 

sinli  coiisciit,  tlic  i»riii(i|i;il,  on  l(';iiiiiii<r  of  (1m'  ffainl.   iiiiiy,  nevCT- 
Ihclcss,  ratify  tlio  sale,  and  rcco\<'i'  tlic  jdirclinsc  price. "^ 


SAME— DUTY  TO  KEEP  PRINCIPAL  POSTED. 

7.  A  factor  must  keep  his  principal  posted  on  all  matters 
material  to  the  agency. 

It  is  a  part  of  a  factor's  duty  to  his  piiii(ii»al  to  koe{)  him  posted 
on  all  things  concerning  the  agency  of  which  the  principal  should 
be  informed.  If  lie  fails  to  do  so,  it  is  negligence,  and  a  palpable 
violation  of  duty,  for  which  the  factor  is  liable  to  respond  in  dam- 
ages to  the  principal, ^2  If  a  factor  sells  on  credit,  and  the  pur- 
chaser becomes  insolvent,  the  factor  becomes  liable  for  the  debt 
by  failing  to  notify  the  principal  wathin  a  reasonable  time  that  the 
debt  is  bad.  The  principal  need  not  prove  that  he  has  sustained 
any  damage  by  reason  of  the  factor's  neglect.^'  So,  a  factor,  after 
a  loss  of  the  princij)ars  goods,  has  been  held  liable  for  failure  to 
give  early  notice  of  the  insolvency  of  the  underwriters,  with  whom 
he  has  effected  insurance  on  behalf  of  the  principal,  in  order  that 
the  latter  might  enforce  his  claim,  and  take  such  steps  as  he  might 
think  proper  for  his  own  security.''*  If  the  goods  consigned  to 
the  factor  are  taken  out  of  his  possession  by  virtue  of  some  legal 
process,  he  should  at  once  inform  the  principal.®' 

61  Wadsworth  v.  Gay,  118  Mass.  44.  A  factor  cannot  make  a  valid  sale  to 
a  partnership  of  which  he  is  a  member.    Martin  v.  Moulton,  8  X.  H.  504. 

82  Harvey  v.  Turner,  4  Rawle  (Pa.)  223;  Arrott  v.  Brown,  0  Whart.  d'a.)  9; 
Howe  V.  Sutherland,  39  Iowa,  484. 

63  Harvey  v.  Turner,  4  Rawle  (Pa.)  223;   Arrott  v.  Brown.  G  AYhart  (Pa.)  9. 

64  Jameson  v.  Swaiuston,  2  Camp.  54<j.  note.  If  it  is  the  factor's  duty  to 
insure  (see  ante,  p.  7),  and  for  any  reason  he  is  unable  to  do  so,  he  should 
notify  the  principal.  Callander  v.  ( )elrichs,  o  Bing.  N.  C,  58;  Smith  v.  Lasceles, 
2  Term  K.  187;  Smith  v.  ColoLraii.  Id.  188,  note.  , 

6  5  Moore  v.  Thompson,  9  Phila.  1(>4. 


14  FACTORS.  (§    8 

SAME— LIABILITY  FOR  NEGLIGENCE. 

8.  A  factor  is  liable  for  all  losses  caused  by  his  negligence 
in  conducting  his  principal's  business. 

A  factor  must  exercise  a  sound  and  lionesl  jnduiuoul  in  tlioso 
matters  which  are  left  to  his  discretion.  lie  will  not  be  n'spon- 
sil)le  if  lie  ai»pear  to  liave  acted  to  the  best  of  his  altilitics,  and  not 
to  have  l»(vn  guilty  of  breach  of  orders,  ^n-oss  negligence,  or  fraud."" 
It  is  not  sulhcient,  however,  that  he  has  not  been  guilty  of  fraud,  or 
such  gross  negligence  as  would  carry  with  it  the  badges  of  fraud. 
He  is  required  to  act  with  reasonable  care  and  prudence  in  his  em- 
jiloynient,  and  exercise  liis  judgment  after  proper  inquiry  and  pre- 
cautions."^ 

If,  through  carelessness  or  want  of  proper  examination  and  in- 
<piiry,  he  gives  credit  to  a  man  who  is  insolvent,  shonld  a  loss  hap- 
pen he  must  indemnify  the  princi])al ;  and,  if  a  debt  be  lost  by  the 
inattention  of  the  factor  in  omitting  to  collect  it  when  it  is  in  his 
power  so  to  do,  he  will  be  liable  for  it."^  Where  a  factor  makes  a 
sale  "on  'change"  for  his  principal,  he  will  be  held  to  a  very  high 
degree  of  vigilance  in  leai'uing  the  pecuniary  ability  of  the  pur- 
chaser. To  protect  himself  in  case  of  a  loss  growing  out  of  the  in- 
solvency or  failure  of  the  purchaser  to  pay  for  the  goods  sold,  he 
must  resort  to  all  available  sources  of  information  that  are  accessi- 
ble, and  inattention  or  carelessness  in  this  respect  will  render  him 
liable  for  any  loss  sustained  thereby;  but  he  will  not  be  held  as 
a  guarantor  of  such  a  sale."** 

A  factor  is  bound  to  tlie  use  of  all  reasonable  diligence  in  caring 
for  the  property  of  his  principal,  and  protecting  it  from  loss.      If 

80  Phillips  V.  Moir,  Gi)  111.  lou;  Liotaid  v.  Graves,  3  Cainos  (N.  Y.)  23S;  Van 
A  leu  V.  Vaudt'ipool,  0  .Tolins.  (N.  Y.)  712;  Moore  v.  Mourguo,  Cowp.  4S0.  The 
appoiiitnii'iit  of  agfUts  of  known  ability  to  make  a  colloction  is  prima  fac-ie  evi- 
dence of  due  diligence,  and  the  consignor  must  prove  negligence  to  hold  the 
factor  liable.    McConuico  v.  Curzeu,  2  Call.  (Va.)  358. 

o^  Leverick  v.  Meigs,  1  Cow.  (.N.  V.l  (Wl;  .Millbank  v.  Dennistown.  21  \.  V. 
3Si;;  De.shler  v.  Heers,  32  111.  .•;(;.S;  I'nlsoni  v.  .Muss(>.v.  S  Creenl.  (.Me.)  {(Hi; 
ItMinI.ill  V.  K'clilni',  CO  Me.  37;  (Jorm.in  \.  Wlircici",  Kt  <;iay  (.Mass.)  ;;(;l';  Thil- 
lips  V.  M(.ir,  (ilJ  111.  1.j5;  Chandler  v.  llogle,  :>s  111.   Hi. 

o  Greely  v.  Bartlctt,  1  Mc.  ir>7.  "»  Fosler  v.  Waller,  ir>  III.  ici. 


§   9)  FACTOU'S    DUTY    TO    FOLLOW    INSTRUCTIONS.  15 

tlio  ])i-iiicipal  «;ivcs  iiisl  i-iid  ions  as  lo  (lie  place  of  storinj;-  liis  <^(Hh\h 
until  sale,  those  insdiiclioiis  iimsl  Ix'  followed  by  the  factor,  or  he 
will  be  held  liable  for  any  loss  which  occurs."^"  A  factor  is  not, 
however,  to  be  held  liable  for  not  anticipatinj,^  a  danj,^er  alto<?ether 
out  of  the  ordinary  course  of  business  or  of  natural  events.^ ^  To 
protect  his  principal  from  loss,  a  factor  may,  in  extraordinary  cases, 
deviate  from  the  instructions  of  the  principal. ^^ 

SAME— DUTY  TO  FOLLOW  INSTRUCTIONS. 

9.  A  factor  Is  bound  to  follow  any  instructions  given  him 
by  his  principal,  except — 
EXCEPTION — When  necessary  to  protect  his  advances, 
he  may  depart  from  his  instructions. 

If  the  instructions  given  by  a  principal  to  his  factor  are  so  am- 
biguous that  two  constructions  may  fairly  be  given  to  them,  every 
principle  of  justice  demands  that  the  want  of  precision  in  the  lan- 
guage of  the  principal  should  fix  the  loss,  if  any,  upon  him,  rather 
than  upon  his  correspondent.'^^  If  the  order  leaves  the  latter  a  dis- 
cretion, the  law  requires  of  him  nothing  further  than  the  exercise 
of  a  sound,  honest  judgment.  But  if  the  order  be  free  from  am- 
biguity, is  positive  and  unqualified,  it  must  be  rigidly  obeyed,  if 
it  be  practicable;  and  no  motive  connected  with  the  interest  of  the 
principal,  however  honestly  entertained,  or  however  wisely  adopt- 
ed, can  excuse  a  breach  of  it.^*      Thus,  where  the  principal  gives 

70  Vincent  v.  Katlior,  31  Tex.  77.  Since  a  factor  is  required  to  exercise  only 
ordinary  care  in  taking  care  of  property  consigned  to  him,  he  is  not  liable  for 
damage  to  cotton  caused  by  exposure  on  the  wharf  to  the  weather,  he  being 
unable  to  procure  immediate  warehouse  room,  owing  to  the  destruction  of  all 
the  warehouses  in  the  city  by  fire.  Foster  v.  Bush,  104  Ala.  662,  16  South.  625. 

Ti  Johnson  v.  Martin,  11  La.  Ann.  27. 

T  2  .Josliu  V.  Cowee,  52  N.  Y.  90. 

73  Brown  v.  McGrann,  14  Pet  479;  Courcier  v.  Bitter,  4  Wash.  C.  C.  549, 
Fed.  Cas.  No.  3,282;  Mann  v.  Laws,  117  Mass.  293;  Geyer  v.  Decker,  1  Yeates 
(Pa.)  487. 

74  Bes-sent  v.  Harris.  G3  N.  C.  .542;  Courcier  v.  Bitter,  4  ^Yash.  C.  C.  .549,  Fed. 
Cas.  No.  3,282;  Parkist  v.  Alexander,  1  .Johns.  Ch.  (N.  Y.)  394;  AYilliams  v. 
Littlefield,  12  Wend.  (.N.  Y.)  302;   Shoenfeld  v.  Fleisher,  73  111.  404;    Pulsifer  v. 


IG  FACTOKS.  (§    9 

orders  to  sell  "ou  ni'rival/'  it  is  no  cxciisf  for  a  failure  to  i\i\  so  that 
the  market  was  dull,  if  a  sale  eould  in  faet  lia\t'  Iteeii  made,  though 
at  a  low  priee."'  So,  a  disolxnlieiu'e  due  to  a  mistake  of  the  factor 
is  no  excuse.'"  liut  a  departure  from  instructions  may  be  excused 
b.v  I  he  happi-ninj::  of  an  event  not  contemplated  at  the  time  the  in- 
strui-tions  wi're  j^iven."' 

If  the  principal,  bein^  informed  b_v  his  a.ucnt  of  a  deviation  from 
his  orders,  make  no  objection  to  the  factor's  conduct,  the  law  con- 
strues his  silence  into  a  tacit  reco}j;nition  of  the  act  or  omission, 
apiinst  which  he  will  not  be  permitted  afterwards  to  comi)lain. 
The  reason  is  obvious.  He  shall  not,  by  his  silence,  place  his  aj;ent 
in  the  predicament  of  losing  all  the  gain  which  may  result  from  his 
well-intended  disobedience,  and  3'et  be  exposed  to  sustain  the  loss 

Sliepard,  30  111.  513;  Maynaid  v.  Pease,  DO  Mass.  ooo;  FioUl  v.  Farriugtou,  10 
Wall.  141;  liioe  v.  Brook,  20  Fed.  Oil;  Sigersou  v.  Pomeroy,  13  Mo.  GL'O; 
llousel  V.  Thrall,  IS  Xeb.  484,  25  N.  W.  U12;  Hatcher  v.  Comer,  73  Ga.  418. 
Where  a  factor  was  iustrucied  by  his  principal  to  sell  wheat  on  cousigumeut 
at  a  specilied  price  ou  a  given  day,  aud,  if  uot  sold  on  that  day,  to  ship  the 
.same  to  New  York,  the  factor  must  obey  iustruetious,  or  he  will  be  liable  as 
for  a  conversion  of  the  wheat.  If,  ou  the  day  he  is  required  to  sell,  he  give  a 
rt'fusal  luitil  the  morning  of  the  day  following,  and  accordingly  perfects  the  sale 
on  that  day,  he  will  be  liable  for  disobeying  the  iustruetious  of  his  principal, 
aud  may  be  treated  as  haviug  converted  the  wheat  to  his  own  use.  Scott  v. 
liogers,  31  N.  Y.  OTG.  Where  a  factor  sells  on  credit,  in  disregard  of  his  in- 
structions, he  becomes  liable  for  the  payment  of  the  debt.  Hall  v.  Storrs,  7 
Wis.  253;   Bliss  v.  Arnold,  8  Vt.  252. 

'^Kvaus  V.  Root,  7  N.  Y.  ISO.  And  see  Howland  v.  Davis,  40  Mich.  545; 
Weed  v.  Adams,  37  Conn.  378.  But  where  a  factor  ueglects  to  sell  cotton  with- 
in a  reasonable  time  after  being  instructed  to  sell,  aud  it  is  destroyed  by  fire, 
the  delay  in  .selling  is  not  the  proximate  cause  of  the  loss,  and  he  is  not  liable 
therefor.  Lehman  v.  Pritchett,  84  Ala.  512.  4  South.  001.  Where  a  factor  re- 
ceives a  peremptoiy  order  from  his  principal  to  sell  goods  consigned  to  him, 
he  uuist  sell  at  once,  or.  if  a  sale  cannot  be  made.  Inform  his  principal,  aud 
await  instructions.    Spruill  v.  Davenport,  110  N.  C.  34.  20  S.  E.  1022. 

-'■•  Kundie  v.  .Moore.  3  .lohn.s.  Cas.  (X.  Y.)  30. 

'"!  In  Dusar  v.  I'erit,  4  Bin.  (Pa.)  301,  a  supercargo  was  compelled  to  go  to  the 
Havana  to  repair  his  vessel,  in  consequence  of  an  accident.  He  sold  the  ves- 
sel and  part  of  the  cargo  at  the  limited  price.  The  residue  of  the  cargo  was 
siild  at  less  than  the  i)rice  fixed  by  his  instructions,  iu  consequence  of  the  ar- 
rival of  other  like  cargoe.s.  Tlie  departure  from  instructions  was  held  to  be 
justified.    Cf.  Bell  V.  Palmer,  0  Cow.  (N.  Y.)  128. 


§  9)  factor's  duty  to  follow  instructions.  17 

which  a  mistaken  judgment  oi-  unforeseen  cir-ciiinslances  may  jtro- 
duce.  But,  to  entitle  tlie  agent  to  the  benefit  of  this  prineiph?  of 
law  it  is  incumbent  upon  him  to  act  with  the  ntmost  good  faith, 
by  making  to  his  employer  a  candid  disclosure  of  his  conduct,  and 
of  the  causes  which  influenced  it,  in  order  that  the  latter  may  have 
the  means  of  judging  in  resjx'ct  to  the  course  w  hich  it  becomes  liim 
to  adopt.'* 

When  a  factor  disobeys  his  instructions,  the  principal  can  lutld 
him  liable  as  for  a  conversion  of  the  goods,'"  and  recover  the  actual 
loss  he  has  sustained  through  the  factor's  wrongful  conduct.  When 
the  factor  sells  at  some  other  tiim^  than  that  ordered  by  his  pi'in- 
cipal,  the  measure  of  damages  is  the  difference  between  the  sum 
realized  and  what  would  have  bcH^n  realized  had  the  sale  been  made 
according  to  instructions.*"  Where  the  factor  sells  at  a  less  price 
than  ordered,  the  recovery  is  not  the  difference  between  what  is  re- 
ceived and  the  price  set,*^  but  between  what  is  received  and  what 
might  have  been  received  within  a  reasonable  time.*^  If  no  actual 
loss  has  been  sustained,  only  nominal  damages  are  recoverable.^^ 

Protecting  His  Advances. 

Wherever  a  consignment  is  made  to  a  factor  for  sale,  the  con- 
signor has  a  right,  generally,  to  control  the  sale  thereof,  according 
to  his  own  pleasure,  from  time  to  time,  if  no  advances  have  been 

'S  Couivier  v.  liiitor,  4  ^\'asli.  C.  C.  549,  Fed.  Cas.  No.  3,282.  A  sale  by  a 
factor  contrary  to  the  orders  of  his  priucipal  may  be  ratilied  by  the  receipt  of 
tlie  proceeds  by  the  hitter,  imless  it  was  uuderstot)d  by  both  parties  at  the  time 
of  such  receipt  that  the  right  of  action  against  the  factor  was  to  be  left  sub- 
sisting. Boyce  v.  Smith,  Dud.  (S.  C.)  248.  Where  a  factor  sells  cotton  in  direct 
violation  of  his  instructions,  the  mere  consignment  in  a  succeeding  year  of  an- 
otlier  crop  by  the  principal  does  not  ratify  the  act,  nor  waive  the  latter's  right 
to  damages  which  he  has  notiiied  the  factor  he  would  claim.  Maggoffin  v. 
Cowan,  11  La.  Ann.  554. 

7  0  Scott  V.  Rogers,  31  N.  Y.  07(5. 

80  Evans  v.  Root,  7  N.  Y.  ISG;  McLendou  v.  AA'ilson,  ,52  Ga.  41. 

81  Dalby  v.  Stearns,  132  Mass.  230.    Contra,  Switzer  v.  Connett,  11  Mo.  88. 

8  2  Romaine  v.  Van  Allen,  26  N.  Y.  315;  Blot  v.  Boiceau,  3  N.  Y.  78;  May- 
iiard  V.  Pease,  99  Mass.  555;  Fordyce  v.  Peper,  10  Fed.  516.  For  the  rule  of 
highest  intermediate  value,  see  Hale.  Dam.  ISO. 

83  Dalby  v.  Stearns,  132  Mass.  230;  Blot  v.  Boiceau.  3  X.  Y.  78;  George  v. 
M'Xeill,  7  La.  124;   .Johnson  v.  Wade.  2  Baxt.  (Tenu.)  480. 

FACTORS— 2 


IS  KAcroRs.  (§  9 

rn:nlc  or  lial>ilitit's  iiiciii'ird  nii  nccnunt  tlii'i-i'of ;  ;nul  llic  f:itM«>i'  is 
1m. 1111(1  to  olu'V  his  »»i-«ifis.  'I'liis  arises  from  I  In-  nidinMiy  i-flalion 
"f  i'liiirijKiI  and  a;;«'nt.  If.  liowt-vci-,  the  factor  inaki-s  a<lvaiu'<'« 
oi'  iiuiirs  lialiiliiics  on  aiioimt  of  ilit-  ronsij^inut'iii,  liv  uliicli  ho 
a<(|nir('s  a  sjtrcial  |ii-o|t('ri  v  ilnTcin.  iIhm  ihr  factor  lias  a  ri;:lii  to 
sell  so  iiiucli  of  the  coiisi^imniit  as  may  lie  iicccssai'v  to  rfiiiilnirsf 
such  advances  or  meet  sinh  liabilities,  unless  there  is  soim*  exist 
in;:  a;ri'cement  l»etN\(M>n  himself  an<l  the  coiisi;^iior  uliich  contiols 
or  varies  this  ri;,dit.  Thus,  for  examjile.  if.  cniitem|»oranii)ns  with 
the  c«>nsi;;nnn'nt  and  advances  or  lialtiliiies.  there  are  orders  ;;i\fn 
1>\"  the  consi^iiior,  which  ar<'  assented  to  ]>y  the  factor,  that  the 
jl:oo<!s  shall  not  lie  sold  until  a  li.\»  d  liuii-,  in  such  a  case  the  ron- 
si;;nment  is  jtresumed  to  he  received  by  the  fa<'t(»r  subject  to  such 
orders;  and  he  is  not  at  liberty  to  sell  the  t^oods,  to  reintbiirse  his 
advances  or  liabilities,  until  after  that  lime  has  elapsed,"*  The 
same  rule  will  apply  to  orders  not  to  sell  below  a  lixed  pri<-e.  nn 
less,  indeed,  the  consii,'nor  shall,  after  due  n<»tice  and  request, 
i-efuse  to  provide  any  other  means  to  reimburse  the  fai-tor."'''  And 
in  no  case  will  the  factor  be  at  liberty  t(»  sell  the  ciuisi^^nimMit  con- 
tiary  to  the  order  of  the  consi;j:nor,  althoii;ih  he  has  math'  advances 
or  incurred  liabilities  thereon,  if  the  c(  nsi;,^nor  stands  ready  and 
oilers  to  reimburse  and  discharj^e  such  advances  and  liabilities. 
<  )n  the  other  hand,  where  the  cousij^umeut  is  made  generally,  wiili 
out  any  specilic  lu-dei-s  as  to  the  time  or  nnxh'  of  sali',  and  the  factor 
makes  advance.5  or  incurs  liabilities  on  the  fo()tin;;  of  such  consij^n- 
ment,  there  the  le;ial  piesumj)!  it»n  is  that  the  factor  is  intended  to 
be  clothed  with  the  ordinary  ri^^hts  of  factors  to  sell,  in  the  exercise 
of  a  soumi  discretion,  at  such  time  and  in  smh  mode  iis  the  usage 
(»f  tratle  and  liis  general  duty  re(piire,  and  to  reimburse  himself  for 
his  a<l\aiices  and  liabilities,  out  of  liie  proceeds  of  the  sale;  and 
the  consignor  has  no  ri;;hi.   by  any  subse(pient   orders,  given  after 

-*  r.riiuii  V.  .McCiaii.  It  I'll.  17'.»;  Fonlyci-  v.  I'lpcr.  ic,  |"c(l.  ."ilC;  Dc  Cumas 
V.  rroMt.  3  Aloori',  1',  C,  (N.  S.)  158;   Smart  v.  Sautlars,  5  .Man.,  (J.  &  S.  iSl>o. 

"■•  I'arkcr  v,  UnuKkcr,  22  Pick.  (.Mas.s.)  40;  .MarlU-Kl  v.  (JotKllmr.  ;{  N.  Y.  «;j; 
lliiiMii  V.  \ainl<Tlillt,  HI'  N.  V.  .V.tl;  Mooui-y  v.  Musscr,  IT.  Iiid.  It.".;  I»nvis  v. 
KoIk'.  ;!t;  Minn.  1!14,  ;50  N.  W.  *')i'>2.  When  a  ih>nianil  winiltl  lie  useless  or  iiu- 
|inM-il(al)le,  iiN  where  tlie  |irln<-i|iMl  is  insolvent  m  in  a  distant  cuuniry.  mt  dc- 
nintid  Im  Ufct  sHary.    lln»w  n  v.  .MttJr.in,  11  I'ei.  IT'J. 


§    10)  KAClOU's    1)1  TV    'lo    A((i)INT.  1'' 

a<Iv;in<<s  li;i\'<'  licni  iii.hIc  «>i"  lialiilil  it  s  iiKUi-rcd  liv  llu'  fa<-1<»i',  lo 
siispriid  or  ((tiilidl  this  liijil  of  s;tl«',  cxtt-pl  s<t  f;ii-  as  i'«-sp<M-tH  tin- 
surplus  of  llit-  ((iiisiuiiimiil  not  iirrcssarv  foi'  llu-  iTimbiirsciiifiil  of 
such  adxaiicfs  or  li;i  hil  il  irs.""  'riir  f'arloi'  imist  not  s"-ll  iiioii-  ihaii 
is  iiccrssary  to  rciiiilmisc  iiiiiisfll."'  Of  coiiis**,  lliis  ri;:lit  of  ilif 
factor  lo  sell,  fo  rfiuilmisf  hims"lf  for  liis  advances  and  lialdlit  ies, 
ajipiits  witii  st  i-oii;;(M'  forco  to  cases  where  the  c«»nsi;,Mioi'  is  insol- 
vent, and  wlirre.  therefore,  the  consi;,Miinenl  constitutes  the  only 
fund  for  indemnity.'''* 

SAME— DUTY  TO  ACCOUNT. 

10.  It  is  a  factor's  duty  to  keep  accurate  accounts  of  his 
dealings  on  behalf  of  his  principal,  and  to  render 
statements  of  account  -when  required. 

A  factor,  like  otlier  a;,^ents,  is  in  duty  Ixtund.  whenever  reason- 
ably retpiested  so  to  do,  to  make  and  present  to  his  principal  a  full 
aud  complete  statement  of  the  dealinj^s  and  state  of  the  accounts 
between  the  parties,  to  the  end  that  the  jtiincipal  may  know  the 
state  of  his  affairs,  and  asoertaiu  the  obligations  he  may  be  under 
to  his  agent.  The  information  sought  by  a  demand  of  a  statement 
is  presumed  to  be  solely  with  the  agent,  and  that  the  principal  is 
ignorant  of  the  true  state  of  alt'airs  as  connected  with  tin-  Inisine.ss 
eontide(l  to  tlie  agent.''"     In  order  that  he  may  fullill  his  obligation 

86  Felld  V.  Farriiiirton.  lo  W;ill.  141;  Talcott  v.  Chew,  27  Fed.  273;  Rice  v. 
Brook.  20  Fed.  ijll;  Blackiiiar  v.  Tlionias.  2S  X.  Y.  07;  Buttortiekl  v.  Stcplu'n.>J, 
r>'J  Iowa,  o'M;  Howard  v.  Smith,  5(j  Mo.  314;  Davis  v.  Kol)e,  3(J  Miuu.  214,  .30  N. 
W.  (;<".2. 

s"  Nflsou  V.  Kailroad  Co.,  2  lU.  App.  ISU;  Weed  v.  Adams,  37  Comi.  .'oS; 
Howard  V.  Smith,  50  Mo.  314. 

**'■  Brown  v.  Mtdran,  14  I'et.  479.  Where  goods  are  consijxned  to  a  factor, 
without  instructions,  and  witliout  advances  made  or  lial)ililies  incurred  l»y  the 
factor,  the  principal  may  at  any  time  control  and  direct  him  as  to  the  terms, 
time,  and  manner  of  selling.  Marlield  v.  Douglass,  1  Sandf.  (N.  Y.)  3G0.  A  fac- 
tor who  does  not  accept  the  terms  on  which  a  consignment  to  bim  is  made 
cannot  resist  such  other  disposal  of  the  goods  as  the  consignor  may  make. 
Winter  v.  Coit,  7  N.  Y.  288. 

811  Terwilliger  v.  Beats,  G  Lans.  (X.  Y.)  403;  Keighler  v.  Manufacturing  Co., 
12  Md.  383;    Dodge  v.  Perkins.  'J  Pick.  (Mass.)  308;    Clark  v.  Mdody.  17  Mas.s. 


20  KAt^dKS.  (§    ^^ 

Ii.  M.cnniit.  il  is  llir  (liH.v  <»f  :i  f;ictor  l(.  kiH-p  b(><.lcs.  in  which  sh:\ll 
I..'  «-.in<'«il.v  ciitcn'*!  the  lr:ms:i»li<ms  on  ju-coiml  «»f  his  inincipal, 
mill  thr  hiltcr  is  cut  ilh-tl  to  a  corrnt  copy  of  Ihr  ciili-ics.  inchnlinjr 
all  iiiriiHU-aiula  coiiiicdrd  1  h.-icw  i(  h.  "'  \'>\\\  uhnc  a  fador  has 
rriiilcn-d  his  acctuint  of  sales  rc-,Milarly,  aiul  tin-  s;uiic  wcic  sctlh-d 
wilh  full  knowl('dj;o  of  all  tln-ii-  iinus.  and  Iho  naiiios  of  pmchascrs 
wciv  not  then  ii-iiuiro*!.  il  is  unrcasnuahh'.  al  any  considci  al.h-  dis- 
lancr  of  time  thrrcafiiT.  lo  siilijc<!  the  tacim-  lo  a  dciiiaiid  for  such 
nanifs.  if  his  fonducl  has  liccn  honest  and  faithful,  and  fi'oo  fi(»in 
frautl  or  doccit.'"  A  factor  is  not  hound  to  account  to  his  prin- 
lipal  until  tlu-  time  lixrd  l.v  the  tonus  of  his  cnipioynicnt  oi'  a  de- 
mand made  by  the  luincipal.'"       \\  lun  a  fadtir  recei\es  nitmey  for 

14:..    A  i»riiuip:il  is  ciitillcd  to  :i  full  kii(.\vlt'tt;:»'  of  the  collateral  securities  In 
the  hands  of  his  faclor.  of  what  has  been  received  from  theiu,  and  a  detailed 
staleineut  of  their  condition.    Kei;,'hler  v.  Manufacturing  Co..  supra.    The  fac- 
tor cannot  refuse  to  account  on  the  grouud  that  the  dealing's  between  tlie  prin- 
cipal and  the  i»urchasers  were  illejial.    I'.aldwin  v.  Potter.  40  Vt.  4Uli.    Where 
a  principal  applied  to  bis  factor,  to  whom  he  liad  intrusted  goods  for  sale  un- 
der an  agency  of  indefinite  duration,  for  return  of  the  goods,  and  notilled  him 
of  a  termination  of  the  agency,  and  the  factor,  claiming  a  lien  for  advances 
and  commissions,  declined  to  surrender,  and.  upon  tlie  principal's  otfer  to  pay 
the  amount  of  the  claims,  substantially  refused  to  make  a  statement  of  them, 
il  was  held  that  the  lien  was  forfeited,  and  the  principal  could  maintain  re- 
plevin for  the  goods.    Terwilllger  v.  Beals,  U  Lans.  (N.  Y.)  403.   Where  a  faclor 
has  transmitted  to  his  principal  accounts  of  two  ditfereut  sales  of  the  same 
goods,  the  priucii>al.  after  having  ajiproved  ;iiul  recognized  the  Ilrst  account, 
is  not  bound  to  ni>tice  or  object  to  the  second,  at  the  peril  of  Its  being  taken 
as  a  stated   account,   and   held  binding  ui»on  him.    Cartwrlght  v.  (.Greene,   47 
IJarb.  <N.  Y.)  1>.    The  owner  of  goods  has  a  right  to  waive  a  tort,  as  against 
factors,  and  to  bring  an  action  to  conijiel  them  to  accoimt.    Lulu-rt  v.  ihauvl- 
teau.  3  Cal.  458.    Since  be  waives  the  tort,  and  sues  the  defendants  as  factors, 
he  can  recover  oidy  the  net  proceeds,  deducting  charges,  etc.,  and  not  the  abso- 
hite  value  of  the  goo<ls.     Lubert  v.   Chauviteau,  H  Cal.  4.")S.     A   pledgee  Is  a 
pmp.  r  p:niy  to  call  a   factor  to  aci'oniU.  where  he  i-eceives  the  goods  with  the 
nnderslanding  that  he  sliouhl  tlispose  of  tlu-m  through  a  factor,  !ind  credit  the 
debtor  with  the  amount  of  sales,  and  he  accordingly  coniniils  tliein  to  a  facu.r, 
from  wlK.m  he  lakes  a  recel).t.     Hlgelow  v.  Walker,  1^4  Vt.   llti.     A  factor  may 
nie  a  bill  against  bis  prindiial  for  an  ac<ount.    l.,uillow  v.  Simond,  2  Caine-s, 
(as.  (N.  V.»  1. 

««"  KelghhT  v.  Maiuif.'iclnring  «  «>.,   I'J  .MM.  .''XJ. 

«»>  Id. 

»2  Lenke  v.  Sutlierhind,  '27>  Ark.  lilU;    Cooley  v.  Helts.  LM  Wend.  fX.  Y.)  'JOri. 


§    10)  KACTOU's    UUTV    TO    ACCOl'NT.  21 

liis  i>riiici|>;il,  lie  Itrromcs  Mm'  |iiiii(iiiiirs  ddiloi-  in  tli.-il  jiukmiiiI, 
:iii(i  is  iKil  i-r(|iiir('(l  lo  keep  Ihc  t'llIl(|^.  of  Ihc  |iriiiciii;il  si'|tiir;i  If  fntiii 
liis  (iwii.  If  he  is  jicliii;^'-  lor  scNcr.il  pi'iiici|);ils,  lie  may  iiiiii;^^*'  all 
the  IiiikIs  ill  a  coniiiion  mass.'"  In  iliis  (cspcct,  factors  dilT*'!-  fi-oni 
otlicr  a;;('iils.'" 

Tlir  jtayiiiciif  of  a  balance  of  accoiiiil  by  a  fact(H"  or  coimiiission 
iiicicliaiit  lo  liis  jiriiicipal,  after  the  sales  made,  and  for  llie  ]nir|>ose 
of  closing,'  llie  aciMMiiits  between  the  paiMies,  is  an  assiiinj)!  ion  of 
the  oiitstandinjj;  debts;  and  couseinienliy  the  pi-inci]ial  is  no  lon;rer 
accountable  or  bound  to  refund  advances,  thonj^h  the  debtors 
finally  fail  to  pay  for  j^'oods  sold  on  credit,  the  proceeds  of  which 
Avere  looked  to  for  I'eimlmrsemeiil."''  I>iil  a  note  ^iNcn  for  the  lial- 
ance  of  an  account,  tliou<;h  i>riiiia  facie  evidence  of  j)ayment  of  the 
account,  may  be  explained  and  rebutted  by  proof  as  to  the  natui-e 
of  the  transaction  between  the  original  parties.*"^ 

It  is  the  duty  of  factors  who  receive  goods  to  sell  to  account  for  the  proceeds 
iu  a  reasonable  time,  without  previous  demand,  wliere  a  demand  is  impracti- 
cal)le  or  liighly  inconvenient.  Eaton  v.  Welton,  32  X.  II.  3.J2;  Lyle  v.  Murray, 
4  S:iiidf.  (N.  Y.)  .-'10. 

>•;'  Vail  V.  Duranr,  7  Alhii  (Mass.)  408. 

»■»  Mechem,  Ag.  §  r.liU. 

0  5  Oakley  v.  Grensliaw.  4  Cow.  (X.  Y.)  250.  But,  to  llirow  this  upon  the 
factor,  a  clear  intention  to  assume  it  should  in  all  cases  be  shown.  Robertson 
v.  Livingston,  5  Cow.  (N.  Y.)  473.  Accepting  the  final  account  of  a  factor, 
without  objection,  discharges  him  from  all  further  liability  to  account  for  sales 
made  by  him  on  a  credit,  tlie  proceeds  of  whicli  lie  lias  not  collected.  Rion  v. 
Gilly.  G  Mart.  (La.)  417. 

»"  Hapgood  V.  Batcheller,  4  Mete.  (Mass.)  ".73.  Where  a  commission  mer- 
chant sold  goods  on  a  credit,  and  then  settled  with  his  principal,  giving  liim  a 
note  for  the  balance,  which  he  stated  was  to  acconuuodate  him,  and,  for  tliat 
reason,  lie  made  it  payaltle  a  few  days  after  the  note  of  the  vendee  fell  due. 
held,  that  this  was  not  an  assumption  of  the  vendee's  debt,  but  that,  to  throw 
tills  upon  the  commission  iiicrchaiii,  a  clear  intention  to  assume  it  should  have 
been  sliown.  Robertson  v.  Livingston,  o  Cow.  (N.  Y.)  473.  In  absence  of  any 
contract,  or  usage  which  may  be  evidence  of  contract,  a  factor  is  not  liable  for 
interest  until  he  is  in  some  default.  Elleiy  v.  Cunningham.  1  Mete.  (Mass.) 
112.  A  del  credere  factor  who,  by  the  default  of  purchasers,  has  become  liable 
to  pay  the  price  to  his  iirincipal.  is  chargeable  with  interest,  without  demand. 
Blakely  v.  Jacobson,  9  Bosw.  (N.  Y.)  140. 


KACTOK8.  (§11 


SAME— DUTY  IN  REMITTING. 

11.  A  factor  is  not  bound  to  remit  until  ordered  to  do  so. 
If  lie  remits  without  orders,  the  remittance  is  at  his 
own  risk. 

A  f;n-tor  is  uiidci"  no  ohli-jfnlion  to  rnnit  to  liis  pi-iinipal  :iny  l»al- 
;iinc  (Ino  tlu'  laltci-  uiilil  lie  is  insinidrd  in  do  sn.'"'  A  usap'  or 
roiirsi'  of  dfalinj;  ltd  urcii  the  jiarlirs,  liv  wliicli  tin-  factor  was  to 
ifiiiii  wiilioiil  iiisiriicii<»iis.  wdiild,  of  conrsr,  alter  tln'  case."*  Un- 
til tli(M-i>  has  liccii  a  dciiiaiid  hy  the  ]irin(-ipal,  he  caiiiMit  niaintain 
an  action  against  the  factor  for  any  balance  due.  since  the  fnctor 
is  j^Jiilty  of  no  In-each  of  duly  in  felainiii;:  the  funds. '^  If  the  fac- 
tor undertakes  to  leiuil  when  no  direction  or  authority  luiH  l>«'en 
^iven,  the  remittance  is  at  his  own  risk.'""  If  a  factor  remit  in 
some  otlu'r  manner  than  that  ordeicd  liv  liis  lu-iiicipal,  or  justified 
l>y  the  course  <»f  dealinj;"  lietucen  them,  he  assumes  the  risk  him- 
self, and  must  Iwarany  loss  that  occurs.'"' 

I'.ut  where  a  factor  is  directed  to  remit  in  liiijs.  if  he  procure 
such  as  are  drawn  hy  jmtsous  (»f  undoulited  credit  at  the  time,  it  is 
a  compliance  with  the  duty  lie  has  to  iHM-form.  The  person  on 
whom  the  bill  is  drawn  rests  in  the  dis<-retion  of  the  drawer.  The 
law  jiresumes  he  has  elTects  f)f  tlie  drawer  in  his  hands.  If  the 
fa«'tor  has  no  cause  to  doulii  tlie  fact,  he  may  take  the  bill  consist- 
ently with  the  <luty  he  owes  his  princijial.  and  will  md  be  liable 
on  the  ;,M'ound  of  ne^liji;ence,  althou;:h  it  shouhl  afterwards  turn  out 
that  the  drawee  was  not  of  known  responsibiliy.  In  such  a  case 
it  is  not  reipiired  (»f  the  factor  lirsl  to  ascertain  wliether  the  jiersun 
on  whom  the  bill  is  drawn  is  in  j,'ood  credit.  Where  the  priiiciir.il 
aiMl  fact(U'  reside  at  a  distance  from  each  other,  it    cannot    lie  rea- 

'■>'  Il.'ilMtii  V.  Crjifls,  4  E.  D.  Smiili  (.\.  V.i  l".>o;  icnis  v.  I'miIs.  to  .Tulms. 
(N.  Y.»  i:.s.".;    CfMilcy  V.  Itctts.  1:4  Wciid    (N.  Y.)  2o.!. 

K"  Hrliik  V.  Dolscn,  s  H:irli.  (.\.  Y.)  :;.;7. 

«"»  IIuldfD  V.  Crafts.  4  K.  I  >.  Smitli  (N.  Y.)  I'.mi;  Mriiik  v.  Dulscii.  s  Harlt.  (.N. 
Y.)  '.'^ll;   CofiU-y  v.  R«*tts,  'J4  W.nd.  (.\.  Y.)  'Jo;?;    (l.iiU  v.  M. .,..!>.  17  .MasH.  14rj. 

•  "••  HaldMi  V.  Crafts,  4  i:.  I>.  ."^iiiltli  (.N.  Y.)  I'.io;  Clark  v.  .Muddy.  17  Mass. 
1  J.V 

101  Kerr  V.  Oittuii,  'J.'J  'lt\.    111. 


§12)  UEL    CUKDKUK    AGK.NT.S.  '23 

sotialily  r\|ici'lc<i  lli:il  iIh-  I:iMi'|-  will  Ii:i\c  it  in  his  p<i\\ci-  lu  nlit:iiii 
iiiforin;!!  idii.  so  as  (o  dfcidc  with  saftlN.  I'.iil  wlicrr  llic  fador 
jinxiiiTs  liills  (liawti  liy  a  linn  <mi  <iih  uI'  iIh-  parlinTs.  and  llic 
drawee  |ti(»\('s  iiisol  \ciil .  Ilie  lacini  is  lialile  if  he  was  in  any  way 
nt'j^lij^L'iit  in  in\  fsi  i^al  in;,^  the  (•re<iil  (tf  the  pail  ners.'"- 

SAME— DEL  CREDERE  AGENTS. 

12.  A  del  credere  agent  contracts  to  become  absolutely 
liable  for  the  price  of  goods  sold  by  him  if  they  are 
not  paid  for  by  the  purchaser  at  the  expiration  of 
the  term  of  credit.  Such  a  contract  is  not  within 
the  statute  of  frauds. 

A  ceiiain  amount  of  confusion  in  tonns  is  to  1)0  foniid  in  th«' 
books  as  to  the  exact  nature  of  the  undertaking,'  of  a  fa<lor  who 
acts  under  a  del  ci'cdei'e  contract.  Such  a  contract  is  in  form  a 
jjuarnnty  or  warranty  of  the  purchaser's  solvency.  On  tlie  one 
hand,  there  are  those  \\Iio  maintain  tliat  an  auent  del  cn-dere  f(»r 
the  sale  of  floods  makes  himself  absolutely  and  in  the  lii-st  instance 
liable  to  his  j»iincipal  for  the  jtrice  of  the  <;oods  sold;  ^'^^  while,  on 
the  other  hand,  it  has  been  stronj^ly  maintained  that  such  an  a^^'ut 
only  incurs  a  secondary  responsibility,  that  of  mere  surety',  where- 
by he  can  be  required  to  pay  only  in  the  event  of  failure  on  the  i)art 
of  the  principal  debtor.^***  And  some  of  the  authorities  have  j?one 
to  the  extreme  of  maintainin;^'  that  tlu^  undertakinj?  of  tlu^  a^^ent 
under  a  del  credere  commission  is  a  mere  j::uaranty  of  the  debt  of 
another,  and  therefore  within  the  statute  of  frauds.^"^"  The  ti-uth 
of  the  matter  seems  to  be  that  the  del  credere  contract  is  sui 
ji;eneris.  The  factor  does  in  a  certain  measure  become  the  princi- 
pal debtor,  but  yet  an  agency  relation  continues  which  materially 
atl'ects  that  of  debtor  and  creditor.      There  is  little,  if  any,  conllict 

10  2  Lovorick  v.  Meigs,  1  Cow.  (N.  Y.)  G4."). 

103  Wioiihult  v.  Kdlu'i-ts.  2  Camp.  58(1;  Houghton  v.  Mattliows.  .•}  Bos.  &  V. 
4So;   Grove  v.  Dul)()is.  1  Term  li.  112;   Mackenzie  v.  Scott.  0  Brown.  P.  C.  1!80. 

if><  Morris  v.  Cleasby,  4  Maule  &  S.  uOO;  Thompson  v.  Perkins,  3  Mason, 
■S.V2.  Fed.  Cas.  Xo.  13.072. 

105  See  Lewis  v.  P.rcluue,  :W  Md.  412. 


•J  4  FACTORS.  (§    12 

ill  til.'  (If.  isiuiis  thriMs.'lvfS  ;ii>;irt  frniii  the  diila  foiiml  in  llir  tii>in- 

ioMS. 

All  tin- cMsi'S  coiicfdi-  il    li>  In-  ihr  iMLilil   of  lln'  juiiK  i|i;il   In  tdiliitl 
]i;i\iin'iil    l«>   llic  ;i.i:"'iil.  mill    !<•   niaiiilaiii   ;in   ;iclitni    liiiiisflt'  a^niiisl 
ihc  Imvfi-  lo  nM-(tV(>i-  llir  priic  of  tin-  i:tio(is.  oi'  lo  |iiiisiit'  liis  ^^kxIs 
or  ilir  Holes  tiikrii   for  ilii'iii   iiilo   ihc   lijiiuls  of  iliird   |>;irlii's,   i»r«'- 
(  isoly  ;is  if  no  del  firdtio  conirnti   existed. '""      And.   llM»H}j:h  such 
iij:lit  in  llie  |irin(ii»:d  wonld  seem  to  bo  consistent   onlv  with  a  col- 
latenil  nndeilakinj;  liy  the  a^u'iit,  yot  the  coiitntct  del  ci-cdcre.  lie- 
ini:  sni  ^M-neris.  is  hfld  in  no  wise  to  chanjjc  Ihc  (»fi;^inal  and  indi'- 
jieiideiit    (  hararter  of  Ihc  a^'-ciit's  niKhM-takin;;  to   his   piinciital.'"' 
A    factor,  nndef  a   <h'l   credei-c  coinniission.   heconies   liaMe   to   his 
inincipal  when  the  |»ui-chase  money  is  due.      As  heiween  him  and 
his  j>i-inci])al.  he  then,   in  etfect.  becomes  the  imi-iliaser.  or  is  snh- 
stitnted  for  the  iMirdiaser.  and  is  honnd   lo  ]iay.  no!   conditionally, 
hut  alisolulcly,  iu  the  lii-st  instance.      Hence,  after  the  factor  has 
sold  tin'  <:o<m1s  nn  cfcdit.  and  s«'nt  an  acconnt  of  sales  to  his  ])i-in- 
cil»al,  the  latter  may  recover  the  i)rice  of  tlie  <:;oods  of  the  factor, 
without   showing  that    he  has  endeavored  to  collect  the  money   of 
the  persons  to  whom  the  factor  sold  the  jjoods.^*"*     And   it    is  no 
defense  to  snch  an  action  that  the  sale  made  by  the  factor  was  an 
incinnplete  sale,  so  that,  as  between  the  faciei'  and  pni-chaser.  ihe 
lactor  could  not  haxc  enforced  the  sanu',  and  collecied   the  money 
of  the  pui-chaser.  in  consiMinence  of  the  want  of  some  formality,  or 
memorandum    or  entry  in   writin;^.  or  actual   delivery,   where   the 
factcu-  has.  in  his  corresjtondence,  treated  the  sale  as  complete  and 
bindin^.^""     "The  umleiiakin','  of  a  factor  is  merely  to  answer  for 

i"0  TlKiiiipsoii  V.  rcrkins.  'A  Mrisoii.  '2:'.'2.  I'cd.  ("as.  Ne.  i:'..'.'T'J. 

i"7  Lewis  V.  liri'liiiic.  :'.:{  -Mtl.  tlli. 

los  Ciirtwriyht  V.  (Jrecnc.  47  H.irl).  (.N.  Y.i  !>.  .V  la.iur  wh.i  ^ii.irMiit  ics  sales 
Ilia. If  tiy  him  on  coiiiniisslou  is  I'lilitlod  to  m-clit  lor  k»><"1s  which  lie  had  sold, 
ami  cliaiK'-d  to  liliii.stlf  in  his  account  of  sales,  lint  :iriei\vards  reccive.l  bai-k 
from  the  buyers,  pursuant  to  autlDilty  jrlveii  by  his  priiii-ii»al  ti>  settle  ;i  dis- 
pute a.s  to  the  (luality.  and  f.ir  ^'.xuls  recovered  from  tlie  buyers  for  fiau.l  in 
pr.euriHK  the  Kale.  Tai.-ott  v.  .Mills  Co.  (Cl.  .\rl).>  .-{o  N.  V.  Supp.  fJl.  .\  la.t'.f 
imiy,  by  c.jiitract,  uuaraiiiy  tli.-  .•.»ll.'ttl«iii  .»f  lii.-  price  of  v'oo.ls  to  !•.'  s.ii.i,  and 
also  that  their  sale  shall  lealiz.-  certain  sums,  lirst  .Nat.  Hank  of  i:i;;iii  v. 
.Sehw.en,  r>'7  111.  .'.7.?.  lio  N.  K.  USl. 

Jo»  Cartwrlght  v.  (Jreeii.',  17  r.aib.  (X.  V.i  !•. 


§  12)  i)i:i,  ( iu:ni;i!K  agicnts.  2') 

tlic  S(»I\ciic\-  (if  the  Ihivcis  of  llic  i^riMids,  (>!•  i-;illi<M"  lo  ;^Mi:if;i  iifv  to  IIh- 
])i-iiici|»;il  llir  |i;i\  iiK'iii  of  ttic  ddits  due  from  tin-  Itiiycrs.  Hi-  lie 
(•oiiirs  liable  lo  |i,iy  lo  ilie  [iriiicJiKi I  (he  aiiioiint  of  the  pnrchasc 
money,  if  the  Imyers  tail  lo  |>ay  i(.  when  it  heroines  due;  and  his 
nmleitakini;'  is  not  collatei-al  wiihin  the  statute  of  frauds.  Imt  is 
an  oiijiinal  and  ahsoInt<'  ajii-ccincnl,  thai  tiw  prices  f(»r  which  tin* 
},^(K)(ls  arc  sold,  or  the  debts  created  by  tlie  sales  of  the  j^oods,  shall 
1)0  paid  to  the  principal  when  the  credit  -i\en  on  the  sales  shall 
ha\'e  expired."  ' '" 

The  only  <lin'ei('nce  between  an  ordinai'y  factor  and  ono  actin/.? 
nnder  a  del  credere  commission  is  as  to  the  sales  made  on  credit.'" 
In  the  latter  cas<'  he  is  absolutely  liable,  and  may  correctly  be  said 
to  become  the  debtor  of  his  principal;  but  it  is  not  strictly  correct 
to  say  he  is  place<l  in  the  same  situation  as  if  he  had  become  the 
I>nrchaser  himself,  for,  as  we  have  seen,  the  principal,  not  wit  h- 
standinj,'  this  liability,  may  exercise  a  control  not  allowable  be- 
tween creditor  and  debtor.  AVhen  the  pnnci})al  api)ears,  the  ri},rht 
of  the  factor  to  receive  payment  ceases.  This  shows  that  the  efifect 
of  the  commission  is  not  to  extinjTuish  the  relation  between  prin- 
cipal and  factor,  but  applies  solely  to  a  guaranty  that  the  pur- 
chaser shall  pay.  It  is  not  a  contingent  liability,  so  as  to  recinire 
legal  measures  to  be  exhausted  against  the  j)ui-cliaser  before  th(» 
factor  is  bound,  but  an  engagement  to  i)ay  on  the  day  the  purchase 
money  becomes  due.  Although  the  factor  is  absolutely  liable,  he 
is  not  bound  to  pay  until  the  money  becomes  due  from  the  j.ur- 
chaser."- 

Statute  of  Fravds. 

Htit  it  seems  nowhere  to  be  retpiirod  that  a  guaranty  of  this  na- 
ture should  be  in  writing,  for  the  liability  is  admitted  to  be  origi- 
nal; and  although  the  vendor  may  in  such  case  forbid  payment  to 
the  agent  if  he  is  insolvent,  and  maintain  an  action  for  himself, 
which  in  other  cases  is  held  to  be  the  distinctive  mark  of  a  collat- 

110  Bnullcy  v.  HicliardsoJi,  1?,  Vt.  TL'O. 

111  Morris  v.  Cleusby,  4  Maule  iV:  S.  .'>(;i».  The  del  credere  agent  mu.st  follow 
instructions  like  other  factors.  Ex  parte  White.  6  Ch.  App.  897.  He  cannot 
receive  payment  except  in  the  usual  way.  Catterall  v.  Hindle.  L.  It.  1  C.  p. 
180. 

11-  Leverick  v.  Meig.s,  1  Cow.  (N.  Y.l  (145. 


L't)  FACTORS.  C§    12 

rial  niiilfrtakiiii:.  yt'l  in  lliis  |»:irt  itiilar  »Miiiti"nl  such  a  |tri\  ilt';j:c  lo 
tlir  \fii«l(»r  is  1m'I(I  iiol  to  allti'  lln-  ualnrr  of  liis  claim  ii|><iii  the 
fa«-t(ir."'  A  jxuaraiitv  bv  a  fa(inr  dilVci-s  very  nialfriallv  fi(»iii  a 
IHMiiiist'  t«)  |Kiy  the  <lcl>t  of  aiioilicr.  Tin-  luiiicipal  Iraiisfci-s  ji 
riulil.  alllniii;:li  iiol  llic  i'\cliisi\r  ri^lil,  Ik  the  fai'lnr.  to  sue  for 
and  iHM'oxcr  tin-  money  in  liis  own  iiamc.  ami  lo  cnjlcci  llir  dchl 
aiul  Imld  llio  moin-y.  acconiit iii:,^  only  foi-  ilic  nd  lialancc  of  ai-counl 
lictwd'H  ihf  parlies.  Thus,  ilic  ddii  cif  ilic  iMircliasci-  is  to  some 
rxit-ni  mado  iln*  |ii-ojKTiy  of  iIk-  faciei-,  and  he  lo  that  oMcnt  1m'- 
ronics  lilt'  iiurcliasor  of  ii.  and  so  far  suhsliluU's  his  liabiliiy  in 
jtlaci'  of  ihat  of  llic  imrchascr.  The  cfTocl  of  this  <rt'n('rally  is  to 
iiialvc  the  factof  pra*!  really  ihc  ownoi-  of  llic  dohl.  and  this  is 
almost  invai-ialdy  so  if  ho  remains  solv»Mit  and  on  jnsl  terms  with 
his  principal.      Then  the  jirincipal  is  iiid<no\vn  to  the  pnrcha.ser.*'* 

liemitfiincts. 

Of  course,  the  ai;ent,  aclini;  under  a  eommission  del  credere, 
where  th<'  LToods  have  l»e<'n  scdil  on  an  authorized  credit,  cannot  be 
re(piire<l  l()  account  to  his  principal  before  the  expiration  of  the 
credit  i:i\-en  lo  the  buyer.  And  if  the  money  which  comes  into  hi.s 
hantls  be  remitted  under  si>ecial  iiist  iiid  ion  from  the  j»rincipal, 
then  it  will  be  at  the  risk  of  the  latter,  provided  the  instructions 
ar«'  observed  with  projK'r  caution  and  diligence  on  the  part  of  the 
a;_Miit.  r.ut  if.  by  the  enj^i<rement,  the  njjjent  became  a  <b'l)tor 
absolutely,  as  if  he  were  himself  the  purchaser,  he  wdiild  be  bound 
l(»r  the  remittance  of  the  money,  as  well  as  for  its  payment  by 
the  buyer,  on  the  {general  i)rinciple  that  the  debtor  is  bound  to  make 
payment  to  his  civditor.^^° 

us  Swnu  V.  Ncsiiulli.  7  I'irk.  iMms^^.i  '2-0;    \\u\lX  v.  K:ii>iiil,  12  L)viuo  (.N.  Y.) 

11*  .siicrw<)o<l  V.  Stouo,  14  N.  V.  L'i'.T. 

Hi  Lewis  V.  Hrehinc,  3.'$  Md.  ll"-'.  lint,  if  tlic  .'ipciit  del  cntlcn'  (Icvi.-ilcs  from 
ilu-  instriictiuu.s  sivcu  him  us  to  ri-uiitlaiici's,  he  is  liaitle  for  a  n-suliiiij;  loss 
i;ke  any  factor.  Levcrick  v.  MelK.s.  1  Cow.  (N.  Y.)  fiKJ.  See  Mackt-nzie  v.  Scott. 
i<  r.rowii,  I'.  ('.  •Jso.  If  a  (id  cndcre  factor  m.-ikcs  a  remittaii<-e  to  his  prin- 
.•i|i:d  by  bill  f»f  excliaiip',  before  the  eX|tiiatioii  of  llie  term  of  credit  oti  wldch 
fhi'  Kood.s  are  noM,  if  will  be  considered  as  a  reinilfanee  of  his  own  funds,  in 
diseharm'  of  a  personal  debt,  and  therefore  at  his  own  risk.  Ileultack  v. 
Uotlier,  li  I>uer  (N.  V.»  l."-7.  Tlie  ^'laranty  of  a  del  credere  eoiimiission  does  not 
C'Xteu«l  to  tlie  n'mitlaiire  of  funds  in  liie  iiands  of  tiie  factor;    Imt   if.  liy  a^ree- 


§  i;j)  FACTuu's  liumv  to  commissions.  27 

SAME     RIGHT  TO  COMMISSIONS. 

13.  A  factor  is  entitled  to  a  commission  on  the  sales  made 
by  him,  unless  some  other  compensation  has  been 
agreed  upon. 

A  factor  usually  receives  liis  compensation  in  a  commission  on 
the  amount  of  sales  made.  The  rate  is  fixf-d  by  the  contr.ict  of  the 
parties,  by  IIm-  usa-v  of  tradr,  or  iij.on  a  (piantum  moniit.^*"  The 
relation  of  i.iiiicipal  and  factor  may  exist  liion^'li  the  factor  receive» 
his  compensation  in  the  form  of  a  salary."'  A  del  credere  agent 
usually  receives  an  additional  commission  for  <,niai-antyin;;  the 
solvency  of  the  purcluusers."^  Ordinarily,  a  factor  who  takes  com- 
missions from  his  principal,  who  employs  him  to  sell,  would  violate 
his  conti-act  should  he  also  take  commissions  from  the  person  to 
whom   lie  sells;""  but,   when   it   is   clearly  understood   by  all   the 

niont  of  parties,  the  factor  is  authorized  to  charge  a  commission  for  the  guar- 
anty of  bills  of  exchange  remitted,  his  omission  to  charge  such  commission  does 
not  absolve  him  from  his  liability  as  guarantor  of  the  exchange.  Heubaek  v. 
Uother,  2  Uuer  (N.  Y.)  227. 

118  Story,  Ag.  §  ii20.  Whether  a  factor  is  entitled  to  commission  on  a  .sale 
on  credit  where  the  purchaser  fails  depends  on  usage.  Clark  v.  Moody,  17 
Alass.  145.  Factors  in  gold  dust  have  no  right  to  talce  their  pay  or  compensa- 
tion out  of  the  gold  dust.  The  gold  dust  is  to  be  treated  as  property,  and  their 
compensation  must  be  estimated  in  money.  McCune  v.  Erfort,  43  Mo.  134.  The 
suggestion  in  1  Pars.  Cent.  *90,  that  a  factor  may  be  entitled  to  commissions 
when  he  is  prevented  without  his  fault,  by  some  irresistible  obstacle,  from 
completing  a  sale,  does  not  seem  to  be  supported  by  the  authorities  cited.  A 
factor  cannot  be  deprived  of  his  commissions  by  the  willful  act  of  his  prin- 
cipal. The  execution  of  a  contract  of  agency,  whose  obligations  are  mutual, 
cannot  be  placed  entirely  at  the  principal's  option.  Thompson  v.  Packwood, 
2  La.  Ann.  G24. 

11"  State  v.  Thompson,  12o  Mo.  12.  2o  S.  W.  .'540. 

lis  Lewis  V.  Brehme,  33  Md.  412.  A  del  credere  c-ommission  is  not  demand- 
able  when  the  sale  is  made  on  credit,  but  is,  nevertheless,  paid  for  in  cash,  in 
consideration  of  a  deduction  of  a  certain  percentage.  Kingston  v.  Wilson,  4 
Wash.  C.  C.  310,  Fed.  Cas.  No.  7,823. 

iioTalcott  V.  Chew.  27  Fed.  273;  Raisin  v.  Clark.  41  Md.  loS;  Lynch  v. 
Fallon,  11  R.  I.  311;   Scribuer  v.  Collar,  40  Mich.  37o. 


28  FACTOI19.  (§    14 

parlirs  lliat  our  \\ln»  is  \k\'h\  niniinissioiis  !<»  sill   is  :ils(i  to  rliai'^^t* 
commissions  fi-diii  iIh-  linv<  t.  tlir  trniismt  imi  is  mn   illi  ^nl.'   " 

A  fiiclnr  \\lii>  is  ^Miiliv  of  fi;uitl  oi-  iituli.Li'iirr  in  ilir  tuntluff  of 
Ills  i»rinfii»;irs  bnsincss  foifcits  nil  cinini  to  tonimissions  or  olliiT 
tH)miH-ns;ilion  f«)r  his  services.'-' 

SAME  — RIGHT  TO  REIMBURSEMENT. 

14  A  factor  is  entitled  to  be  reimbursed  for  advances 
made  to  the  principal,  and  for  expenses  properly- 
incurred  in  conducting  the  business. 

A  ]>riniii>al  is  Imund  to  n-inihurst'  liis  I'attor  for  all  advances 
inado  on  ;:oo(ls  consign*  d  to  tho  lattfi-,  and  for  all  sums  i»rt»iMMly 
«-.\lM-udo<l  on  ilio  ]>rin«i|iars  acconnl.'--  Where  a  faitor  niaki's  ad- 
vances, indejteiident  of  an  atiual  aui-eenienl  to  that  elVect.  the  lef^al 
inference  is  that  they  were  math-  n]M»n  the  joint  cre<lit  of  the  ikt- 
sonal  security  of  the  principal,  and  of  his  j;oods  and  money  that 
nii^^ht  come  to  liand.  This  beinj;  tlie  case,  the  factor  may  lelin- 
<liiisli  his  lien  on  the  latter  without  at  all  alVectini;  his  personal 
i-enn-dy.  So  he  may  renounce  his  ri^hl  to  resort  to  the  i>erson, 
and  look  alone  to  his  lien  for  icimhursement.^-^      It  is  then  a  rigiit 

>-•'>  Tnlcott  V.  Clu'W.  Ii7  Ked.  L'T.'J. 

121  Fonlyc,.  V.  INpcr,  If,  Fed.  .")1C.;  Norninii  v.  rcpcr.  24  I'imI.  -JO.?;  Taltott 
V.  Cluw.  L'T  Icl.  L'T.J;  Dodge  v.  Tih'sloii.  IJ  Tick.  (.Ma.«<s.)  .TJs;  Hranimu  v. 
Stnnws,  7.".  111.  'SM;  So^rar  v.  Pnrrlsli.  120  Crat.  (Va.)  c,72;  Vciuniiii  v.  (JrcKory. 
L'l  I.iwa.  .T_»t;;  Smith  v.  Crews.  2  Mo.  Apj).  L'til);  Wiilte  v.  ('hai>ninn.  1  SlarkU', 
li:*,;  llaiiKiiid  V.  Holiday,  1  «':ir.  A:  V.  .'^^I,  I><iicw  v.  1  lav.r.ll,  ;!  «'aiiiii.  4r.l; 
lliirst  V.  Iloldint,',  :{  Taunt.  :'.::. 

■  :■-•  D.ilan  V.  Thoinpson,  li:<;  Mass.  is:!;  H.vliwitli  v.  Sit. Icy.  11  Pick.  (Ma^s.) 
4S2;  rpliam  v.  I><'favour,  11  .Mcic  (Mas.s.)  171;  Cnrli.s  v.  Cmuiniii;;.  C  Cow. 
(N.  Y.)  IMI:   Siri>n«  v.  .Stewart,  It  Ildsk.  (Tcmi.i  l.;7. 

123  Hurrlll  V.  IMiiliips,  1  (Jail.  :V4),  IVd.  Cas.  N...  2.-J«io;  rdscli  v.  l»i.ks<iii,  1 
Masiin,  '.»,  rc«l.  Ciw.  No.  lO.'.Hl;  Corli.s  v.  «'niiiiiuii;,'.  G  Cow.  tN.  Y.)  ISl; 
lialdcrsion  v.  Uiibl.cr  Co..  is  U.  I.  :ul\  27  .Ml.  .".07.    'Hie  owner  of  goods,  on 

consigning  tlicni  to  a  < inil.sslou  in<-rcliant  for  sale,  drew  lillls  tiitou  the  con- 

«l|fn«f.  which  were  accept. -d  and  iiaid.  and  tiic  consigm-c,  on  selling  the  go.»ds. 
tfKjk  noU-jj  of  the  ptirchiiKcrH.  payable  to  hlinwlf  or  order.  Imt.  before  the  iioten 
fell  due.  the  purcliaHcrH  be«ntne  ln.<»olvent.  It  wjis  held  that  prima  f.-n-le  n  right 
of  ucilou  uccruid  lo  thu  cuu.slgut'L-  Inunedlately  ui>ou  hl8  making  Ih.-  .-idvanc.'H 


§  lo)  factor's  kumit  to  indemnity.  20 

of  wliicli  (lie  f;i<toi'  or-  liis  rf|ir('sciil,i(  i\cs  iii.iv  ;i\.iil  I  IkmhscIvcs; 
bill,  wlicic  (licrr  is  IKi  (dill  |-;Hl  (iIIht  ||i;i||  ||i;iI  wliidi  is  implied, 
(die  wliii  liiis  iM'iniiic  ;i  siiicl  v  (if  tlir  jiri  mi  jm  |,  jo  iifuml  .MlvaiiccH 
iii.'nlf  lo  liiiii,  ciiiimil  olcci  lor  the  f;icloi-,  ;iml  roret-  liim  i;il  IfMHt  at 
law)  to  ass('i-(   iiis  liiii  ii|ioii  ihc  -^oods  oi-  money  of  tin-  |ii-iii(iiial.''-* 

SAME     RIGHT  TO  INDEMNITY. 

15    A  factor  is  entitled  to  indemnity  for  all  losses  and  lia- 
bilities growing  out  of  the  principal's  business. 

A  principal  is  lioiiiid  to  iiidcmiiify  his  I'actoi'  for  all  losses  sus- 
tained or  liabilities  inciii-i-ed  in  the  course  of  the  a^^-my.  If  the 
factor  sells  ;,r,„„is  in  his  (twn  naiix'.  with  the  usual  wai-ranties, 
and  is  compelled  t(»  pay  the  jturchaser  damaj^es  for  breach  of  war- 
ranty, he  is  entitled  to  indemnity  fi-om  the  principal.'-^  And 
wlieie  cotton  was  consij^ned  lo  a  factor,  to  be  sold  on  commission, 
and  if,  after  it  was  sold,  and  the  account  betwei^n  him  and  (lie  piin- 
cijial  settled,  he  was  compfdled  to  refund  to  tli<-  purchaser  (tn 
account  of  the  false  packing-  of  some  of  the  cotton,  lie  can  recover 

to  the  consi;,'uor,  notwitlislniuling  he  lind  a  lien  on  the  notes  as  security  fur  tlie 
debt  due  to  liini,  and  tliat  tlie  burden  of  proof  was  on  the  cou.sifiuor  to  show  au 
agreement  not  to  eonunence  an  action  until  the  notes  should  have  fallen  due, 
and  been  dishonored.  Beckwith  v.  Sibley,  11  Pick.  (Mass.)  482.  The  factor 
may  sue  without  waiting  for  a  sale  to  be  made.  Dolau  v.  Thompson,  12(i 
Mass.  is;?.  There  may,  of  course,  be  an  agreement  to  wait  for  a  sale.  Upham 
V.  Lefavour,  11  Mete.  (Mass.)  174. 

i-J  Martin  v.  Pope,  C  Ala.  ."..".2. 

126  Holdgate  v.  Clark,  lO  Wend.  l.\.  V.)  21(;:  Hill  v.  Packard.  .".  W.iid.  (N.  Y.) 
375.  So,  w-here  the  factor  mistakenly  soKl  repudiated  bonds.  uuiUt  a  repre- 
sentation that  they  were  good  -fundaltle  l)onds,"  the  principal  was  compelled 
to  make  the  loss  good  to  the  factor.  Maitland  v.  Martin,  SG  Pa.  St.  120. 
Where  a  commission  merchant,  by  direction  of  his  principal,  sold  for  the  lat- 
ter 5,00(>  bushels  of  wheat,  to  be  delivered  at  any  time  during  the  current  year, 
at  the  seller's  option,  and  after  an  advance  in  tlie  price  the  principal  refused 
to  stand  to  the  contnict,  and  the  factor  settled  with  the  buyer  by  payin;:  iiiui 
the  difference  between  the  contract  price  and  the  market  value,  the  principal 
being  unknown  to  the  purchaser;  held,  that  the  principal  was  liable  to  his 
agent  for  the  sum  so  paid  by  him,  and  also  for  his  commissions.  Searing  v. 
Butler,  CO  111.  575. 


30  KACTOIJS.  (§    IG 

t  luTcfdi-  frtiiii  tlir  iiiiii(ijt;il ;    Imt   icchmial  inn  niiist  Ix-  iiiadc  acitud 
iiiLT  t(»  llic  iMistoiu  of  tin*  Inisiin'ss,  williiii  siuli  rcasoiialtlt'  time  as 
would  oiialilc  llio  (Ifft'iidaiits  to  i-oclaiin  from  the  pailifs  fiom  whom 
liny   jiiiiiliasrd.       What    uoidd   lio  a    n-asoiialth'   liiiic   woiihl   he   for 
1  III-  jury  lo  dfcidt'.*-" 

SAME— LIEN. 

16  A  factor  has  a  general  lien  on  all  the  property  of  his 
principal  in  his  hands,  to  secure  his  demands  against 
the  principal.  The  lien  is  subject  to  the  following- 
conditions: 

(a)  It  does  not  attach  to  the  goods  of  the  principal  until 

they  come  into  the  factor's  possession. 

(b)  It  is  extinguished  by  payment  or  -waiver. 

(c)  It   may  be   foreclosed   or   enforced   by  a   sale   of  the 

property  by  the  factor. 

A  fatt<»r  has  a  Vwu,  not  only  for  his  connnissions.  but  for  his 
expenses  in  c  (inducting  tlu*  business,  for  advances  nuule  to  the  \n-\u- 
<-il>al.  and  for  lialiilitios  incuiii-d  by  the  factor  lor  tin-  principal. '■' 

i2«  Heach  v.  Branch,  57  (Ja.  .'iC'J. 

1^'  Kalon  V.  Tnicsdail.  r>-2  111.  ."iOT;  Matthews  v.  ^I(•nc(l^'cI•,  2  McLean,  14.". 
Fed.  Cas.  No.  U.'JSU;  ^•:lil  v.  Dmant.  7  Allen  (Mass.)  4US;  llaebler  v.  Lutt^'i-n 
(Minn.)  ♦«  N.  W.  7L'o;  ("olley  v.  Merrill.  <;  (ireenl.  (Me.)  'A;  State  v.  Tlumiii- 
son,  V2U  Mo.  12,  2.">  S.  W.  34G;  IIod;,'son  v.  Paysou,  ;{  liar.  &  .1.  'MV.);  Nesniith 
V.  CaleU'hMin;;  Co..  1  Curt.  C.  C.  VM\,  Fed.  Cas.  No.  lo.TJl;  .Inrtlan  v.  .lanus.  :• 
Ohio,  8S.  The  lien  does  not  cover  delits  liavin^jr  no  connection  with  the 
a;;ency.  Stevens  v.  Robins,  12  .Mass.  1.S2;  Iloujiliton  v.  .Nt.illlu  ws.  o  Itos.  \-  ]'. 
4.s.">;  Drinkwater  v.  (Joodwin,  Cowj).  2.'>1.  And  sih'  I'.iory  v.  Honiiij;er,  4(5  M«l. 
r.O.  The  riu'lit  of  «'le<tion  whicli  the  law  j.'ives  the  party  injured  to  i-onvt'rl 
a  tort  into  a  contra<"t  of  .-^ah'  caiuiot  l>e  ext«'nded  to  create  a  lien  for  the  money 
which  Would  lie<'onie  due  thereby  upon  u;<»<  (is  hcjij  in  pursuance  of  an  ordinary 
i-onuncn-ial  nlation.  '"JMie  doctrine  of  a  factors  lit  n  for  a  itinera  1  balance  of 
ac(  iituit  never  went  so  far  as  to  cinbr:i<'e  even  tlie  jtriee  of  j.'oods  sold  by  a 
factor  to  his  pritx-iital  not  <-onne<-ted  with  tlic  uciici:il  jmrposcs  of  their  rela- 
tion as  principal  and  a^eid."  Thacher  v.  Hannahs.  I  Ktjb.  (.\.  Y.i  4o7.  A 
factor's  lien  d<K'S  not  exist  when  the  general  l)alance  of  accoinit  is  ai-'.Minsi  tlie 
factor.  MeCraft  v.  Unj,M'e.  (10  Wis.  4(M),  11)  N.  W.  .'..'.O.  A  factor  has  no  lien  in 
respect  of  debt -I  which  arctsc  jirior  to  tin-  time  :it  whlcli  his  character  of  f.actor 
connueuced,  nor  in  respect  to  torts.     StniKis  v.  Slacum,  is  I'ick.  (M.iss.i  .•[i;.     A 


§  10)  KA«  tcju's  i.ikn.  31 

Xo  (lisliiicl  ion  is  rcco^^nii/.cd  lid  ween  ;l  li<ii  for  s|MMi;il  ;i(l\  niucs  or 
^■(Mi(M-;i!  ;i<l\;iiicrs  on  ncrounl  of  ImsiiK-ss.  \or  <lo  I  in-  liouUs  sfcin 
1()  liniil  llir  lien  (o  jji-oix-rly  ;ic<iMin'<l  willi  tii<-  money  :i(lviin<<'<l, 
l)nl  il  seems  (o  extend  all  of  the  properly  in  hi.s  liimdH,  against 
third   |>ersons.'-^ 

The  doctiiiie  of  <:eneial  lien  in  favor  of  a  factor  is  not  confined 
to  a  fxencral  ;ij,^ency,  but  ni>|iiies  ;is  well  to  a  limited  nnmber  f)f  dis- 
tinct ti-ansaetions  ns  to  a  coniinnons  dealing.  Wliene\<r  llie  rela- 
tion of  j»riii(i|ial  and  factor  exists,  the  right  of  lien  at  ladies  to 
secure  all  advances  niad(»  or  liabilities  incnrn-^l  in  the  coui-se  of  liis 
business  by  the  factor.  So,  it  seems  that  the  doctrine  of  lien  may 
be  enforced  as  well  by  a  so-called  "purchasing  factor"  as  by  a  "sell- 
ing factor."^-"  As  between  the  principal  and  factor,  the  general 
I'ight  of  j)roj)erty  in  tlie  owner  will  be  made  to  yield  to  the  special 
property  of  the  factor,  necessary  to  satisfy  his  liens.^^"      Yet  the 

factor,  aceopting  a  consifrnment  with  instructions  as  to  payment  of  tlie  pro- 
ceeds, lias  no  lieu  for  any  general  balance  due  liiui.  Goodliue  v.  McClarty.  ;> 
La.  Auu.  447.  Where  a  factor  indorsi's  bills  for  his  principal,  such  liability 
^ives  him,  as  a  factor,  a  lien  on  a  bill  Iheu  in  his  hands  belouj,'iug  to  the  prin- 
cipal, and  indorsed  to  him  for  collection,  to  meet  the  event  of  his  indorse- 
ments; and  the  fact  that  the  factor  receives  a  commission  on  his  indorsements 
does  not  in  any  way  alTect  the  general  question  as  to  his  lien  as  factor.  Hodg- 
son V.  Payson,  3  Har.  &  .7.  (Md.)  lilVJ.  A  factor's  lien  for  a  general  balance  ac- 
crued in  tlie  lifetime  of  his  i)rincipal  does  not  attach  to  the  property  coming  in- 
to the  factor's  possession  after  the  principal's  <leath,  by  order  of  his  repre- 
sentative. See  Wylly  v.  King,  Ga.  Dec.  (pt.  2)  p.  7.  Statutes  in  Georgia  and 
Louisiana  give  a  factor  who  advances  money  and  supplies  to  a  planter,  to 
enable  him  to  raise  a  crop,  under  an  agreement  that  the  crop  shall  be  con- 
signed to  the  factor,  a  lien  on  the  crop  while  growing.  Thomason  v.  Poullaiu, 
o4  Ga.  :50C.;  Tift  v.  Newson.  44  (Ja.  COO;  Smith  v.  Williams,  '22  La.  Ann.  1208; 
Richardson  v.  Dinkgrave,  20  La.  Ann.  (mI. 

128  Winne  v.  Hammond.  :j7  111.  l»i>. 

12^  Where  a  purchasing  factor  had  transmitted  two  distinct  orders  for  goods, 
and,  on  the  arrival  of  the  fii'st  parcel,  delivered  an  invoice  of  the  same  to  his 
principal,  and  accepted  his  draft  for  the  amount  thereof,  payable  at  a  future 
day,  it  was  held  tliat,  by  so  doing,  he  had  waived  his  lien,  which  otherwise 
would  have  existed  on  the  first  parcel,  for  the  price  paid  or  responsibility  as- 
sumed on  account  of  the  second  parcel;  and.  upon  his  refusal  to  deliver  up  the 
tirst  parcel,  an  action  of  trover  was  held  to  lie  against  him.  Bryct.'  v.  HriKiks, 
2(i  Wend.  .".Cm. 

130  lloUingworth  v.  Tooke,  2  H.  Bl.  50:;.    The  factor  has  only  a  special  prop- 


32  FACTOICS.  (§    lt> 

(iwiiff  iiKiy,  ;il  ;iiiy  linif  In  f(irr  adual  sale,  liy  |»ayiiiLr  tlic  lialaiico 
ami  tliscluir^'^ini;  tlu'  i-csjunisiliililics  of  ilir  tartdi-,  willidraw  his 
ctTt'cis;  aiwl.  if  (lie  factor  hcctuiu'  iiisoh nil.  ilic  ^(mkIs  remain  the 
|irii|iril\  (if  ihf  iiiimi|)al,  siilijfct  lo  ihc  lien  i>\'  ihi-  fad  m'.''" 
Thfsr  liens  arc  all<i\\  f(l  foi-  the  c»iii\  (Miieiicc  (tf  tra(h',  wilii  a  \  icw 
lt>  the  nature  of  the  factor's  emphjvment,  and  to  encoaraj;e  ad- 
\ances  upon  ijoods  in  his  possession,  or  to  be  c(»nsi;_nied  to  liim,  and 
are  favored.''-  The  factoi-'s  i-i;:hi  to  his  lien  is  an  a^M-eement 
wliich  the  hiw  implies. '•''■'  If  llie  factor  lias  sold  the  ^oods,  and 
parted  wiih  the  possession,  he  has  a  lien  on  the  piice  in  the  hands 
<if  the  purchaser  foi-  what  is  due  to  him:  and  liie  owner  cannot 
set  u|>  his  ri,i,dit  to  the  money,  excej^t  where  the  f.-iclor  has  nolliin;^ 
due  to  him.'-'*  .\nd.  where  the  owner  aliens  the  property,  the  juir- 
cliaser  takes  it  subject  to  the  lien  of  the  factor. ^^^ 

A  oommissiou  meirhant  who  has  sold  a  i)art  of  the  {joods  left 
with  him  for  sale  is  entitled  to  a  lieu  upon  the  residue.^^"  The 
lien  of  a  factor  covers  also  money  recovered  on  an  insurance  policy, 
taken  out  in  favor  of  the  i)rincipal.^^'  Uut  a  factor  has  no  lien 
lui  troods  of  a  stranji'er  consijunied  to  liim  by  oiu*  haviui,^  no  rij^ht 
to  do  so.^^**  In  some  states,  however,  it  has  been  provided  by 
statute  that  every  person  in  whose  name  nu'rchamlise  is  shipped 
for  sale  shall  be  deemed  the  true  owner  so  far  as  to  entitle  the 
consij^nee  to  a  lien  thereon  for  money  advanced  or  securities  given 
to  the  shippei-  on  account  of  the  consignment,  unless  the  consijiuee 

city.     U.  t>.  v.  Villaloujxa,  211  AVall.  :;."■;    Willianis  v.  Tilt.  :M\  \.  Y.  olU;    Heard 
v.  Brew-or,  4  Daly  (N.  Y.)  l.'JC;    Hall  v.  Hinks,  121  Md.  4U0. 

131  Ziuck  v.  Walker,  2  W.  lil.  lir>4,  ll.lO. 

131:  Houubton  V.  Matthews,  3  Bos.  it  P.  4S.j,  4SS,  4l)S. 

133  Walker  v.  Birch,  G  Term  li.  Ii(i2. 

134  Brander  v.  Phillip.s,  10  Pet.  121;  Brown  v.  Mclirann,  14  Pet.  470;  Brown 
v.  Combs,  G3  X.  Y.  5'JS;  Drinkwater  v.  Uoodwiu,  Cowp.  2.">(j;  Houyhlou  v. 
Matthews,  3  Bos.  &  P.  4S;». 

13.'.  Godiu  v.  Assurance  Co.,  1  i'.uiritws,  4S'J;  Jordan  v.  James,  5  Ohio,  88; 
Katon  v.  True.sdail,  .".2  111.  307. 

130  Sewall  V.  .\i<li..ls,  :;4  .Me.  ."iS2. 

137  Johnson  V.  Campliell,  120  Mass.  4l'.>. 

J3H  Bank  of  Koclu'Ster  v.  Jones,  4  X.  V.  I'.i7;  'I'liaclier  v.  II;niii;ilis,  1  U.ih. 
(.v.  Y.I  407;  Oliver  v.  .Moore,  12  Ileisk.  ('I'enn.t  -IS2;  Kyiier','  v.  Siiell.  2 
Wash.  C.  (".  40.3,  I"m1.  ("as.  No.  12.1!io;  Bell  v.  Priwell.  2.3  I.a.  .\nn.  7iM;;  Suc- 
cession of  .N'nrtoii,  21   l.a.  .\iiii.  21S;    llullaiid  v.  lliiiiilile,  1  Starkie,  113. 


§    10)  FAfTOU's    1,1  KN.  33 

had  notice,  by  tlic  1>ill  of  hiding  <»r-  ollxM-wiso,  llial  Iho  8liipy)or  waH 
not  llic  actual  uwimm-.'"'  These  HlatntcK  do  not  aj)iily,  of  coui-He, 
unless  tlie  real  ownei"  coiiseiilcd  to  the  shipment.  The  acts  op- 
erate as  ail  esloppri  on  liiiii  for  I  he  prolecl  ion  of  I  he  factor.  \\  ln-n 
the  consij^nnieiil  was  made  in  \ioi;iii(»n  of  his  ri^lits,  Ik-  is  not 
esttipped,^**^ 

W/i^^  Lf<m  Aff aches. 

The  lien  of  a  factor  is  dependent  on  iK>ssession,  and  do<'s  not  at- 
tach until  the  proi>erty  on  which  it  is  obtained  is  in  the  poss(;ssion 
ot  the  factor.^*^  A  great  deal  of  difficulty  luus  been  encountere<l 
in  determining  what  constitutes  possession  by  the  factor,  and  there 
is  some  conllict  in  the  cases,  though  it  is  not  so  extensive  as  it 
seems  at  first  sight.  Whether  the  necessary  possession  exists  is 
a  (jiiestion  to  be  determined  by  the  siKH;ial  facts  of  each  cuse.  The 
difficulty  is  contined  almost  entirely  to  cases  where  goods  have 
been  consigned  to  a  factor  to  whom  the  consignor  was  indebted, 
and  the  consignor  has  subsequently,  but  before  the  goods  were  re- 
ceived into  the  actual  custody  of  the  factor,  attempted  to  change 
the  consignment  to  another  person, ^*^  or  the  consignor's  ci'^ditora 
have  seized  the  goods  before  they  reached  the  factor. 

Where  there  is  a  general  balance  of  account  due  the  factor,  a 
consignment  of  goods,  without  any  special  contract  that  those 
goods  shall  be  so  consigned,  does  not  give  the  factor  a  lien  at  the 
time  they  are  received  bv   the  carrier.^*^     And  especially  is  this 

139  Massachusetts,  Pub.  St.  c.  71,  §  2;  Maine,  Rev.  St.  c.  31,  §  1;  Rhode 
Ishiud,  Pub.  St.  c.  136,  §  1;  New  York,  Laws  ISIiO.  c.  179.  §  1;  Ohio,  Rev.  St. 
§  3214;  Wiscou.siu,  Saul).  &  R.  Anu.  St.  §  334.j;  ^laryland,  Rev.  Cotle,  art.  34, 
§§  1,  2;   Pennsylvania,  Briglitly's  Purd.  Dig.  "Factors,"  §§  1,  2. 

140  Kinsey  v.  Leggett,  71  N.  Y.  387;  How  land  v.  Woodruff,  GU  X.  Y.  73; 
Mechanic-s'  &  Traders'  Bank  of  Buffalo  v.  Farmers'  &  Mechanics'  Nat.  Bank 
of  Buffalo,  GO  N.  Y.  40. 

141  When  goods  are  loaded  upon  tlie  factor's  drays,  his  lieu  is  complete 
against  attaching  creditors  of  the  owner.  Burrus  v.  Kyle,  5G  Ga.  24.  Actual 
possession  of  the  cargo  of  a  ship  may  be  obtaincxl  without  unloading.  Rice  v. 
Austin,  17  Mass.  197. 

14  2  The  right  of  the  consignor  to  substitute  another  consignee  is  in  some  of 
the  cases  put  on  the  ground  of  his  right  of  stoppage  in  transitu.  .Jordan  v. 
James,  o  Ohio,  88;  Tlie  Merrimack,  8  Cranch,  317,  329. 

143  Lewis  v.  Railroad  Co.,  40  111.  281;    Strahorn  v.  Transit  Co.,  43  HI.  424; 

FACTORS— 3 


34  FAcrous.  (§  IG 

I  111'  case  when  the  bill  of  Indiiii,^  for  \\\o  <;o(»(ls  is  held  by  a  lliird 
iM'i'son  as  a  pledp:*'!'  fin- a  NaluabU'  consideration.'''  if  a<tnal  ciis- 
to<ly  of  tlu'  -xoods  is  obtaiiicil  l)y  tlio  factor  wroimfuliy,  liis  lieu 
dors  not  ailacli.'^-'  'rims,  wiicir  ilic  bill  of  lading-  is  sent  at- 
lacliotl  to  a  draft  on  the  factor,  if  lie  iffnscs  to  accept  the  draft,  his 
retention  of  the  bill  (if  ladini;'  will  .i:i\e  him  no  lien  for  his  ;j:enenil 
balance,  tlion.uh.  by  means  ef  the  bill,  he  obtnins  the  ;,^oo(ls.''"  Itut, 
when  the  factor  makes  advances  on  the  faiili  of  tin'  consignment 
of  designated  ^ikhIs,  his  lien  attaches  en  their  delivery  to  the  car- 
rier.'^' Some  cases  so  hold  when  the  factor  nndvcs  no  new  ad- 
\anct'.  bnt  the  i:<iods  are  censi^^ned  under  a  sjwcial  aj^reement  to 
do  s(i  in  payment  on  a  general  balance.'"'      To  the  pidposition  that 

Kybcri:  v.  Snell,  2  Wash.  C.  C.  21M,  403,  Fed.  Cas.  Nos.  12,189,  12,190;  Bonner 
V.  .Marsh,  10  Suiedes  «&  M.  (Miss.)  37G.  A  delivery  of  proportj'  to  a.  carrier  by 
tlie  owner,  to  be  shipped  to  another  point,  not  the  place  of  l)usiness  of  the 
factor,  and  tlie  takinj;  by  the  owner  from  the  carrier  of  a  bill  of  ladinj;  in  the 
name  of  such  factor,  and  forwardinj;  it  to  him,  are  not  conclusive  on  the  ques- 
tion of  the  intent  of  the  owner  to  deliver  possession  to  the  factor,  where  there 
are  other  facts  in  the  case  tending;  to  show  tliat  it  was  not  the  purpose  of  the 
ewner  to  surrender  possession  to  the  factor,  but  that  the  object  of  sliipping  In 
the  name  of  the  factor  was  to  obtain  the  benefit  of  a  thiou|.rh  rate,  whicli  could 
not  be  obtained  if  the  shipment  was  made  part  of  the  way  in  the  name  of  the 
owner,  and  thereafter  the  balance  of  the  distance  to  the  place  of  business  of 
the  factor  in  his  name,     liosenbamn  v.  Hayes  (N.  D.)  (t7  N.  W.  9r>l. 

1**  Marine  P.auk  v.  Wright.  4.S  N.  Y.  1;  First  Nat.  Bank  of  Chicaf^o  v.  Bay- 
l.'y.  .llo  Mass.  228;  Davenport  Nat.  Bank  v.  Ilomeyer,  4.")  Mo.  14.'.;  First  Nat. 
Bank  of  Batavia  v.  Kfxe,  109  N.  Y.  120.  Ki  N.  E.  :n7. 

1*5  Winter  v.  Coit,  7  N.  Y.  288;  Bank  of  Roclicst<-r  v.  .loiics.  4  X.  Y.  4;t7; 
Marine  Bank  of  Chicafio  v.  Wrij^ht,  4S  N.  Y.  1;  Davenport  Nat.  Hank  v.  II(»- 
nu-yer,  4.">  .Mo.  14.");    Bruce  v.  Wait.  :i  Mees.  &  W.  ir>. 

n'i  .Mien  V.  Williaiiis.  12  I'ick.  (Mass.)  l.'!»7;  Bank  of  Koi-hcster  v.  Jones,  4 
N.  Y.  4'.t7;   Winter  v.  Coit,  7  .\.  Y.  "Jsn. 

n-  Bailey  v.  Bailnad  Co..  \U  \.  V.  70;  Hoibrook  v.  Wi-lil.  21  Wciid.  e\.  Y.i 
ICil;  .I<irdan  v.  .Tames.  '>  Ohio,  SS;  Ilardcninn  v.  De  Vauirlin,  4il  (Ja.  .V.Hi;  El- 
liott V.  Cox.  48  (la.  :'.!»;  Hcslia  v.  I'ope.  f.  .\la.  <;:)0.  .\nd  sc*'  \'allf  v.  Cerre's 
.\<liirr.  .'{<;  Mo.  ."7".  ANlicrc  ;i(cc|)taiiccs  were  iiiMiie  on  the  ciedit  of  a  cou- 
siKiniient  the  destination  of  whicli  was  stilise<niently  cliaiipMl  i»y  the  eon- 
siunor.  the  factor  cannot  enforce  his  claim  for  a  lien  if  tlie  drafts  liave  lieeii 
paid  by  the  consi;rnor  before  tiie  suit  is  liiciiiL-ht.  ami  (lie  f.ietdi-  thus  relieved 
from  liability.     WoodrufT  v.  Hailroad  Co.,  2  Head  ('I'eiiii.i  S7. 

1*'' Clark  V.  Maurnn.  '.i  Baiue  (.\.  Y.)  :'.7:'.:  W:irle  v.  Ilaiiiiltoii.  :>.o  <;a.  l.".o: 
D;ivis  V.  I'.r.'idlev,  2S  Vt.  US.     .Vii.l  see  Brown  v.  Wij:i:iii.   Hi  .\.  H.  .'!12. 


§  IG)  factou'h  lien. 


.i.> 


llic  lien  anaclics  in  llicsc  cmsch,  llicrc  aic  some  coiilra  dtM-isioiis."^ 
As  lon}4'  ixa  the  jjjoods  rcniaiii  in  the  posseasiou  ol'  lii<*  i)iin<i[>ai,  I  in* 
factor  ac(inii'('s  no  licn.'^" 

J/c/w  Lien.  Lout. 

A  factor's  lion  conliinics  only  wliilr  (lie  factor  liiinsclf  lias  the 
possession,  and  llicrerorc  if  he  pledges  llic  <:,(M)ds  for  his  own  di-bt^ 
or  suffers  them  to  be  attached,  or  otherwise  parts  with  them  vol- 
untarily, the  lieu  is  lost,  and  the  owner  may  trace  and  recover 
theui,  or  he  may  sue  in  trespass  if  they  are  forcibly  taken;  for  he 
has  constructive  possession  notwithstanding  the  lien.^°^  None  but 
the  factor  himself  can  set  up  this  pHvilej-e  against  the  owner.  It 
is  a  personal  privilege  of  the  factor,  and  cannot  be  transferred,  nor 
can  the  question  upon  it  arise  between  any  but  the  principal  and 
factor.^ '^■-  But,  unless  the  factor  does  some  act  which  amounts 
to  a  ixdinquishment  of  his  lien,  he  cannot  be  deprived  of  it  by  tue 
creditors  of  the  princii>al.^'^^      The  death  of  the  principal  while  the 

149  Saunders  v.  Bartlctt,  12  Heisk.  (Toun.)  310;  Kinloch  v.  Craig,  3  Term  K. 
119. 

150  Oliver  V.  Moore,  VI  Heisk.  (Teun.)  4S2.  And  see  Baker  v.  Fuller,  21  Pick. 
(Ma.ss.)  318.  Wliere  jioods  were  shipped  to  tlie  consignor's  agent,  to  be  by  him 
delivered  to  tlie  factor,  liis  lien  was  lield  not  to  liave  attached.  Brown  v.  Wig- 
gin,  16  N.  H.  312. 

151  Holly  v.  Huggeford,  8  Pick.  (Ma.ss.)  73;  Jarvis  v.  Kogei-s.  lo  Mass.  380; 
Jones  V.  Sinclair,  2  N.  H.  31'.);  Uaubigny  v.  Duval,  5  Term  R.  600.  A  commis- 
sion niercliant  advanced  money  to  his  principal  on  his  indorsenu-nt,  and  cliar- 
ged  tlie  note  upon  whicli  the  advance  was  made  in  liis  general  account.  Hcld^ 
that  the  mere  cliarging  of  the  note  to  the  principal  did  not  entitle  the  latter  to 
its  possession.  The  agent  had  a  right  to  retain  it  as  his  principal's  property 
until  he  was  paid  the  balance  of  his  general  account  arising  in  the  course  of 
tlieir  dealings.  Myer  v.  .Jacobs,  1  Daly  (X.  Y.)  32.  Taking  a  note  from  the 
princi])al  is  not  a  waiver  of  the  lien.  Stoiy  v.  Flournoy,  T>7i  Ga.  56.  But  see 
Darlington  v.  Chamberlain.  20  111.  App.  443,  where  taking  a  judgment  note 
was  held  a  waiver.  That  neglect  to  enforce  the  lieu  will  operate  as  a  waiver, 
see  (Jrieff  v.  Cowgull,  2  Disn.  (Ohio)  ,">8. 

152  Holly  V.  Huggeford,  8  Pick.  (IMass.)  73;  Barnes  Safe  &  Lock  Co.  v. 
Bloch  Bros.  Tobacco  Co.,  38  W.  Ya.  1.58,  18  S.  E.  482;  .Tones  v.  Sinclair.  2  \. 
H.  321;  Ames  v.  Palmer,  42  Me.  107;  Daubigny  v.  Duval.  ."»  Term  li.  0(M1. 
The  personal  representatives  of  a  deceased  factor  may  enforce  his  lien.  Gage 
V.  Allison,  1  Brev.  (S.  C.)  40.3. 

153  Eaton  V.  Truesdail.  52  111.  307;    White  Mountain  Bank  v.  West.  4(;  Me. 


oO  •  FACTORS.  (§    in 

;;ikk1s  ari*  in   transit   will   not   di-fcat   n   fattui-'s  lim   wliirli   had   at 
taclu-d.''*       If    ilic   |>i-oj>cil,v    hi'   volunlaiil.v    drlis  fir<l,    the    lim    is 
«-xtini:nisli«'d.  and  caniKit  l)t>  rrasscilcd.''-'       l?ut   if  ll\<'  d»'Iivii-\    he 
sjM-cial.  SI)  tliat   ilir  farioi-  siill  i-ciains  Ilir  cnnlrol  of  tin-  ino|MTty, 
the  lim  is  not  n'lin«inislird.''"' 

A  fartor  cannot  slo]»  j»i-o|»('iMy  in  ti-ansiin.  wlu-i-o  In-  lias  \(diin- 
lafilv  drli\('rcd  u\>  the  jMisscssion  of  it.  on  any  jn-flmsc  that  he  has 
a  lien  n].on  it  fof  ad\antis  inadf  on  acronnt  of  ihi-  piinciital.  lla\ 
inu  parted  with  the  possession  of  the  j»i'o|»erIy.  he  has  relimpiislied 
his  lien,  and  cannot  reass^-rt  it.  The  owner  may,  in  some  cases. 
I'tLTain  the  posses.si<)ii  of  jti'ojierty  sold  and  delivei'ed  liy  him,  and 
liidd  it  until  the  i)ayinent  of  the  considoration  shall  1m'  rei-ei\cd. 
r>i:t  this  cannot  be  done  by  a  factor  whose  interest  is  sptH:-ial  and 
connecte<l  with  tlie  possession. ^°'  If  a  factor  ha.s  a  lien  on  j^oods, 
but.  when  they  are  demande<l  of  him,  ]tlaces  his  i-efusal  to  deliver 
ou  some  other  ^m-ouikI  than  that  of  hi.s  rij,'-ht  to  a  lien,  he  waives 
the  lien.^'"*  The  lien  may,  of  course,  be  waived  by  express  con- 
tract before  or  after  it  has  attached.^''"  The  principal  may  at  any 
time  discharge  the  lien  by  tendering  the  balance  due  the  factor, 
and  securing  him  against  accej)tajices  or  other  outstanding  liabili- 
ties incuned  for  the  principal. ''^'^ 

1.'.;  45aii;:h  v.  Kirkpatrick,  54  Pa.  St.  84;  Baruott  v.  Warren,  82  Ala.  o.'.T.  •_' 
.SoulL.  457;    Bard  v.  Stewart,  3  T.  B.  Mou.  72. 

is«  Ilauimitiids  v.  Barclay,  2  East,  227. 

1^5  Sawj-er  V.  Lorillard,  48  Ala.  'XV2;  Lickhairuw  v.  .Mason,  r.  Kast,  22;  Bli;,'li 
V.  Davies.  28  Bcav.  211. 

i-«  .Matthews  v.  Mcuodj;cr.  2  McLean,  14.5,  Fed.  Cas.  No.  J).28l>;  Winue  v. 
llaiiiiiKind,  .'37  III.  U'J;  Jordan  v.  James,  5  Ohio,  SS;  Davis  v.  Bradley.  2S  Vi. 
118.  A  factor,  having  a  lien  on  goods  consigned  to  liim  Ity  viriric  of  an  agret^ 
luent  with  LLs  principal,  do»'s  not  preclude  himself  from  insisting  on  his  lien 
liy  holding  ont  his  principal  as  the  owner  of  the  goods.  Seymour  v.  Iloadley. 
U  Conn.  418.  The  conveyance  by  a  princii)al  cannot  destroy  or  impair  juiy 
lieu  which  the  factor  had  previously  aciiuired.  Bard  v.  Stewart,  3  T.  B.  Mou. 
(Ky.)  72. 

I'--  .Matthews  v.  Menedger.  2  .Mcl.ran.  1  15.  I'ed.  (as.  .No.  '.»,2S'J. 

lit  Winter  v.  Colt,  7  .\.  Y.  2S,S. 

X60  Schlffer  v.  Feagln.  51  Aln.  .'{.'{5. 

10"  Beehe  v.  Mend.  :'.:'.  N.  Y.  .587;  (lage  v.  Allison,  1  Brev.  (S.  C.)  I'.i5:  Join  s 
V.  Tarleton,  'J  Mces.  A:  W.  (;75. 


§    17)  KACTOK's    IUGHTS    against    'lUiUD    I'KUaONS.  o7 

JIow  Lien  Enforced. 

^^'('  lia\«'  already  seen'"'  that  a  fact(»i'  iiiav  sell  ciKtiijjli  (if  llic 
j,^<>(»(ls  in  his  hands  to  satisfy  Iiis  lien,  and  tlial  In-  may  so  stdl 
aj^ainst  \\w  onh'i-s  of  the  inincipai  as  lo  time  and  jti-icc,  if  lie  first 
jjives  notice  to  tlic  pi-incii»al  t(>  redeem."-'  If,  aftei-  the  salo,  ii 
bahinco  remains  due  the  factor,  he  may  proceed  aj^ainst  tlie  piin- 
cipal  ixTsonally.^"^  The  factor  is  not,  however,  confined  to  tiiis 
remedy.  lie  may  liave  his  lien  foreclosed  in  equity,  and  will  be 
entitled  to  ;i  decree  for  any  deficiency  thai  may  icmain.^*'* 

SAME  -RIGHTS  AGAINST  THIRD  PERSONS. 

17.  A  factor  may  maintain  actions  against  third  persons 
on  contracts  of  sale  made  by  him,  and  for  injuries 
to  the  goods  of  his  principal. 

A  factor,  in  selling  the  goods  of  his  principal,  acquires  contract 
rights  against  the  vendee,  and  may  sue  him  for  the  price  of  the 
goods  sold,^'^'^  or  for  breach  of  the  contract  of  sale,^*^**    being  ac- 

161  Ante,  p.  19.  A  factor,  while  indebted  to  his  principal,  cannot  sell  the 
property  of  the  principal  to  pay  obligations  on  account  of  the  factoragi'.  Alex- 
ander V.  Mon-is,  3  Call  (Va.)  S'J. 

162  Miller  v.  Price  (Cal.)  89  Pac.  781;  AVeed  v.  Adams,  37  Conn.  37S;  Mar- 
field  V.  Donglass,  1  Sandf.  (N.  Y.)  30(). 

163  Whitman  v.  Morton,  46  N.  Y.  8nper.  Ct.  5.31;  Giliou  v.  Stanton,  9  \.  Y. 
476;  Corlies  v.  Camming,  G  Cow.  (N.  Y.)  184;  ^lottram  v.  Mills,  2  Sandf.  (N. 
Y.)  1S9. 

104  AVhitman  v.  Ilorton,  46  X.  Y.  Super.  Ct.  531;  Gihon  v.  Stanton,  9  X.  Y. 
476;  Denuey  v.  Wlieelwriglit.  Go  Miss.  733;  Strong  v.  Stewart,  9  Heisk.  (Tenn.> 
137. 

i65Toland  v.  Murray,  18  Johns.  (X.  Y.)  24;  White  v.  Chouteau.  10  Barb.  (X.. 
Y.)  202;  Ilsley  v.  Merriam,  7  Cush.  (Mass.)  242;  Gii-ard  v.  Taggart,  5  Serg. 
&  R.  (Pa.)  19;  Graham  v.  Duckwall,  8  Bush  (Ky.)  12;  Miller  v.  I^a,  35  Md.. 
396;  Sadler  v.  Leigh,  4  Camp.  195.  The  factor  may  collect,  in  his  own  name^ 
notes  ft)r  his  principal's  goods,  which  arc  payable  to  himself.  Van  Staphorst 
\.  Pearce,  4  Mass.  258.  The  factor  may  maintain  an  action  against  a  ware- 
houseman for  a  breach  of  his  contract  to  store  the  goods.  Allen  v.  Steers,  39 
La.  Ann.  .5S(;,  2  South.  199.  But  a  factor  cannot  maintain  an  action  against  a 
carrier  for  delay  in  transportation  when  his  lien  lias  not  attached.  Cobb  v. 
Railroad  Co.,  88  111.  394. 

ie«  Groover  v.  Warfield,  50  Ga.  644, 


3S  FACTOHS.  (§17 

foiiiilalilt'  tt»  his  |iiiii«i|);il  for  ilic  aiiHuml  rc'covci*'^!.  As  will  lie 
Sf<Mi  latt-r."''  the  |iriiiri|ial  alsn  lias  a  rii;lil  In  siic  the  piiri-liascr; 
and  a  rrr(i\ CIV  hv  liiin  will  liai'  an  atlioii  liv  ilic  factor.""  r.iit, 
wIk'Ii  the  fadoi-  lias  a  lifii  on  I  In  iiidcccds  of  ihc  salr.  iln-  |iiinci 
]>al  rann-it  cm  otV  lln- facloi-'s  i-ii:lils  ihrrrin."'"  if  lln-  fador  txi\cs 
the  jiiircliasiM-  iiolicc  of  his  litn.  jiavan-nt  \>\  the  latter  to  the  prin- 
cijKil  will  not  i-cliovo  him  of  lialiilitv  to  the  factoi-.''"  Wln-n  a 
factor  sncs  a  pnichasn-  on  tin-  contract  of  sale  the  latter  may 
avail  himself  of  anv  defensi'S  which  he  has  a;;ainst  tiie  iirincipal  '"' 
or  aj;ainst  the  factor;'"'-  l)nt  the  purchaser  is  not  allowed  to  avail 
himself  of  set olTs  against  tiie  princi[»al  to  an  extent  that  would 
defeat    the  faclol-"s   lien.' " •' 

It  has  Iwen  seen  that  a  factor  has  a  s)MM-iaJ  propei-ty  in  tlie  {joods 
of  his  jirincipal,  so  far  as  they  come  1o  his  hands.  This  is  by  vir- 
tue of  his  lien.  This  s]>ecial  ]>roiK'rly  j^ives  him  the  riLilit  t(»  sue 
for  and  recover-  it  if  illeij;ally  dis]>ossessed.' "^  or  1o  maintain  tres- 
]>ass  for  injury  it  may  sustaiu  by  a  wron;;doer,  precisely  as  if  he 
was  the   -general   owuer.*'^      Nor  can   a  tort  feasor  question    his 

10'  Tost.  p.  41. 

108  Ki'lh'v  v.  .Miinson.  7  .Mass.  'AV.);    (loldcn  v.  r»'vy.  1  Car.  Law  Ucpos.  aL'T. 

i«9  Hudson  V.  (Iran;;!'!-,  .".  P>arn.  iV  Aid.  '27. 

I'o  St(»ry,  Ag.  §  4L'4;    Drinkwatcr  v.  (loodwln,  Conip.  '27>\. 

171  Gric-e  v.  Konrick,  h.  K.  '>  g.  H.  344. 

»*2  (;iJ)son  v.  WinttT,  .">  Barn.  «.Sc  Adul.  1K>. 

173  DrinkwattT  v.  fJoodwin,  ("owp.  L'.")l.    Sec  ante,  p.  — . 

i^MVinnc  v.  llanuiiond.  I'.l  111.  '.I'.i;  ]lnil)niuk  v.  Wight.  24  Wend.  (X.  Y.) 
Hi'.t;  Ladd  v.  Ark»-ll.  ;{7  N.  Y.  Supir.  Ct.  ;;.">;  (luruni  v.  Carey,  1  Abl).  Vviu-. 
(S.  Y.)  285;  Fitzhu^'li  v.  ^\■ima^.  U  X.  Y.  n.lO.  He  may  maintain  replevin  for 
the  gofxls.  even  against  an  <>lti<-t'r  who  has  attached  them  on  i)recept  against 
the  general  owner.  His  consent  to  l)e(-ome  keeper  of  the  goods  for  the  attach- 
ing ofM(-er  does  not  defeat  his  right  Xo  maintain  sudi  aition  of  replevin. 
?<ewall  V.  .Nichols,  'M  Me.  ."..S-J. 

>7.'.  C.  s.  v.  N'illalonga.  L'.'.  Wall.  :'..";  I'if/.lmgli  v.  Wiin.-ui.  !»  N.  V.  ."..'.'.i;  Connn 
V.  Carey,  1  Alih.  Prae.  (.\.  Y.)  '2s:>;  Kobinson  v.  \Vel)h,  11  Hiisli  (Ky.)  4(V4: 
I'.eyer  V.  I'.ush,  .%()  Ala.  IK.  ^^■here  bnildlngs  are  destroyed  to  arrest  a  con- 
tlagnitlon.  ji  factor  may  claim  damages  for  goods  desti-oyed.  to  the  amotnu  of 
his  lien  for  i-liaiges,  etc.,  lint  he  camiot  claim  the  value  of  the  goods  for  the 
lienetit  of  the  owner.  .May<ir  of  New  ^Hil;  v.  Stone.  Jo  Wciid.  (\.  Y.)  i:!!l.  LT. 
Wend.  (.\.  Y.)  ir»7.  An  lu-llon  for  <-onvei-sion  will  lie  at  suit  of  a  f.-uMor  who 
has  Htored  ih-ojhmI.v  consigned  to  him  with  ;i  thiid  [tart.v.  from  whose  posses- 
Hlon  it   has  liicn   taken  liy  a   wrongdoer.    'Hw  riglit   of  action  does  not  depend 


§    IS)  factor's    LIAIIII.ITIKS    TO    TIIIIU)    I'KIISONS.  3'J 

lillc.''"  W'licii  Ihc  r;icl(>c  sues  a  sli-aii^ci-  for  a  ronvcrsiuii  (if  lln- 
jtriiiciiKirs  ^^nods,  Ihc  iiicasiirc  ol  (laiiia|j<s  is  lln-  \alii<-  nf  llir  ^ooiIh. 
lUit  when  lu>  sues  the  principal  ov  some  one  standiii^^  in  I  lie  pi-iii- 
(•ipal's  place,  as  an  atlacliin;i  cit'diloi-,  llie  i-ecovcrv  is  liiniicd  (o 
the  value  of  llie  factor's  special  proiiei-ty;  that  is,  to  the  ainonnL 
(iC  his  lien,''^ 

SAME— LIABILITIES  TO  THIRD  PERSONS. 

18.  A  factor  may  be  liable  in  contract  to  purchasers  frora. 
liim,  or  for  conversion  to  the  real  o'wners  of  goods 
■wrongfully  consigned  to  him. 

The  liability  of  factors  to  third  persons  with  whom  they  contract 
in  relation  to  the  business  of  their  agency  is  the  same  as  that  of 
other  agents  making  contracts  on  behalf  of  principals  who  are 
disclosed  or  undisclosed.^'^ 

Foreign  Facfoi's. 

It  was  formerly  considered  that  factors,  acting  for  merchants 
resident  in  a  foreign  country  were  personally  liable  for  contracts 

upon  the  fact  of  possession;    it  grows  out  of  the  I'ight  to   the  possession. 
Gorum  v.  Carey,  1  Abb.  Prac.  (N.  Y.)  285. 

176  Wiuue  V.  Hammond,  37  111.  99. 

177  Heard  v.  Brewer,  4  Daly  (N.  Y.)  136. 

17S  McCullough  V.  Thompson,  4-5  N.  Y.  Super.  Ct.  449;  .Tohnson  v.  Mcf'anip- 
bell,  0  Baxt.  (Tenn.)  294.  When  the  proceeds  of  a  sale  made  by  the  factor  are 
appropriated  bj-  the  principal,  with  the  consent  of  the  factor,  to  the  use  of  a 
crcdittir  of  the  principal,  the  factor  is  bound  to  hold  the  proceeds  for  that 
purpose.  Lowery  v.  Steward,  25  N.  Y.  239.  Where  a  consignor  directs  the 
proceeds  of  certain  bales  of  cotton  to  be  applied  by  his  factor  in  payment  of  a 
specific  debt  of  his  son,  he  is  warranted  in  countermanding  the  direction  at 
any  time  before  the  factor  has  thus  appropriated  the  money,  or  entered  into 
an  agreement  Avith  the  creditor  who  is  the  object  of  the  remittance  to  hold  it 
for  his  use.  AValton  v.  Tims,  7  Al:i.  47o.  A  factor  has  the  right  to  pay  the 
proceeds  of  property  sold  by  him  to  the  owner,  although  he  may  know  that  the 
owner  has  promised  them  to  his  creditors.  Pearce  v.  Roberts,  27  Mo.  179.  A 
factor  who  sells  oil,  with  a  warranty  of  quality,  without  designating  himself 
as  "agent,"  is  personallj-  liable  on  the  warranty,  altlumgh  he  has  settled  with 
his  principal  before  notice  of  the  breach,  and  altliongli  the  vendee  was  in- 
formed before  action  brought  that  the  factor  was  not  acting  for  himself. 
Hastings  v.  Levering,  2  I'ick.  (Mass.)  214. 


40  FACTO  us.  (§18 

iiKidc  bv  tlit'in  for  tlu'ir  rin|>lov('is,  iio(  willislnndini;  tlu'V  fiillv  dis- 
closcil  at  llio  limo  tlio  cliaraclcr  in  wliicli  tlu-v  wnc  adinj;.  "lu 
such  cases  iho  ordinary  itrrsuiiiption  is  thai  civdil  is  j^ivcn  to  the 
ajient  or  factor.  Tliis  ])r('sniiiitlioii,  liowcvcr,  is  lialdc  to  be  i-ebul- 
ted  eiilier  l>y  j>n»ofs  that  (he  credit  was  uixni  lo  hoili  iii'iii(i]ial  and 
aiieiit.  or  to  tli(»  })rincij)al  only,  or  that  the  usiijj^e  of  trath'  (h)es  not 
«'Xtend  to  the  particuhir  case."  ^^°  lint  the  rnh>  above  stated  has 
bt><n  held  not  ajtplicable  to  the  case  of  a  ]»rin(i|)al  who  is  donii- 
«iled  in  another  state  of  the  Tnic^n.^''"  And  llie  r'ule  has  been 
rejindiated  ])y  the  hiter  decisions,  and  no  distinction  is  uow  recog- 
nized between  foreign  and  domestic  factors. ""^ 

Liahilifj/  for  Conversion. 

The  eori-ect  rule  to  determine  the  liability  of  a  factor  who  lias 
in  jiood  faith  sold  goods  which  did  not  belong  to  the  principal  is 
involved  in  some  doubt.  This  is  owing,  probably,  to  the  confusion 
w  Inch  exists  in  the  law  as  to  what  constitutes  conversion.  If  a 
factor  receives  a  consignment  of  goods  from  one  having  no  right  to 
sell  them,  and  the  factor  sells  them,  and  jxiys  over  the  proceeds 
to  his  principal  without  notice  of  the  true  owner's  rights,  he  is  not 
liable  for  a  conversion.^ ^-  But,  if  he  refuses  to  comply  with  a  de- 
mand of  the  true  owner  while  the  goods  or  their  proceeds  are  in  his 
possession,  he  becomes  liable  for  their  value.^®'  So,  if  he  has  con- 
structive notice  in  any  way  that  they  do  not  belong  to  the  princi- 
pal, he  is  liable.^***      And  it  has  been  held  that  a  factor  who  makes 

170  story,  Ag.  §  2G8;  McKcnzie  v.  Nevins,  22  Me.  143;  A'awter  v.  Balcor.  2.\ 
Iiul.  C'i;   Kojiors  v.  March,  33  Mo.  100. 

180  Kiikpatrick  v.  Slainer,  2*J  AYeud.  (N.  Y.)  254;  A'awtor  v.  linker.  1^  Iiul.  U3. 

isi  Oolricks  v.  Ford.  2,3  How.  4'J;  Bray  v.  Kottoll,  1  Atlcn  ^Mass.)  SO;  Kaul- 
Jiaek  V.  Cliuicliill.  ."!)  N.  II.  2JHi;  Green  v.  Koi)ke,  30  Kng.  Law  iK:  i:<i.  3tti;; 
llsl.-y  V.  M.MTiani,  7  Cusli.  (Mass.)  242. 

i"^  Abernatliy  v.  AVIiccltr  (Ivy.)  17  S.  W.  8."»S;  Koacli  v.  Turk.  9  IIei.sk. 
(Teun.)  70S,  overruliug  Taylor  v.  Pope,  5  Cold.  (Teuu.)  41.3. 

!•'•■»  Uoaeh  v.  Turk,  9  Heisk.  Cl'eiiu.)  70S.  A  factor  notilicd  iliat  cnttou  con- 
si^'iied  to  him  by  a  third  person  belongs  to  i)laiiitifl's,  and  diiid.'d  not  to  pay 
over  tlie  pn»cccds  without  their  oonscnt,  is  lialde  for  any  subscipicnt  payment 
III  tlic  consignor,  not  depending  upon  a  superior  rigid.  LcdoiLX  v.  Anderson,  2 
I, a.  .\iMi.  ."iS;  Lodoux  v.  ('ooper.  Id.  r)SO. 

!"<  As  where  there  is  a  chattel  niortgaue  on  a  growing  crop,  iluly  recorded, 
or  where  the  factor  knows  facts  which  give  him  implied  notice  uf  a  landlord's 


§    i9)       KIGIITS  AM)  I.rAIUI.ITIirs  OK  Pia.NClI'AI.S   KSU  TIIIUI)  PKUSONS.  41 

advances  on  j^oods  wliicli  liis  j)i'iii(ip;il  Imd  no  r'i^lil  to  ronsi^n  1o 
him  asscTls  a  siiccial  i»i-o]H'r'l  v  tlMioin,  advci-sc  lo  tlic  claim  <ir  (lif 
true  owniM',  and  tlicichy  bccoines  liable  t'oi*  convci-sion,  thonj^h  Ik? 
has  sold  the  ^^oods  lo  satisfy  his  advanrcs,  oi-  has  returned  them  to 
tlie  prin(.-ii>al  on  the  laltor  repayinj^  tlir  advances.^*' 


RIGHTS  AND  LIABILITIES  OF  PRINCIPALS  AND  THIRD 

PERSONS. 

19.  Principals  may  maintain  actions  on  the  contracts  made 
by  their  factors,  and  for  injuries  to  their  property 
in  the  hands  of  their  factors.  They  are  liable  on 
the  contracts  made  for  them  with  third  persons. 

A  piineipal  may,  of  coiH'se,  sue  on  contracts  made  by  the  fac- 
tor/®**  whether  the  purchaser  knew  at  the  time  of  the  sale  tliat  he 
was  dealing  with  a  factor  or  not.^"  The  principal's  right  to  re- 
cover the  purchase  price  is,  however,  limited  in  two  ways:  Firsf, 
as  already  seen,  his  right  of  action  is  subject  to  the  factor's  lien 
on  the  proceeds  of  the  sale;  ^^^  and,  second,  when  the  principal 
was  not  disclosed,  the  purchaser  can  set  off  against  him  any  claims 
he  may  have  acquired  against  the  factor,  up  to  the  time  he  received 

lieu  on  them,  he  is  liable  for  conversion  if  he  sells  the  crop,  and  pays  the 
proceeds  to  his  principal.  Merchants'  t^c  Planters'  Bank  v.  Meyer,  50  Ark.  i'M, 
20  S.  W.  40G. 

1^5  Newcomb-Buchanan  Co.  v.  Baskett,  14  Bush  (Ky.)  O.-jS.  And  see  Rol- 
lins V.  Fowler,  L.  R.  7  H.  L.  757. 

186  Ilsley  V.  Merriam,  7  Cush.  242;  Leverick  v.  Meigs,  1  Cow.  (N.  Y.)  045; 
Kelley  v.  Muuson,  7  Mass.  319;    Merrick's  Estate,  5  Watts  &  S.  D. 

187  Locke  V.  Lewis,  124  Mass.  1;  Roosevelt  v.  Doherty,  129  Mass.  301; 
Guard  v.  Taggart,  5  Serg.  &  R.  19;   Miller  v.  Lea,  35  Md.  390. 

188  Ante,  p.  38.  A  factor  may  make  an  entire  contract  for  the  sale  of  his 
own  goods  and  those  of  a  principal,  or  for  the  sale  of  goods  of  two  or  more  prin- 
cipals. In  such  case  no  action  can  be  maintained  for  part  of  the  goods  unless 
the  contract  made  by  the  factors  has  been  performed.  Roosevelt  v.  Doherty. 
129  Mass.  301.  So,  where  the  factor  takes  one  note  for  such  a  sale,  it  operates 
"to  suspend  the  right  of  action  of  any  of  the  principals  until  the  expiration  of 
the  credit  given  by  the  factor  in  taking  the  note.  Hapgood  v.  Batcheller,  4 
Mete.  (Mass.)  573. 


42  VACTons.  (§  10 

iioiifc  tif  iIh'  riirlils  df  llic  itriiici|i;il. '""'•'  If  llic  iMirrlinscr  knew  at 
tlir  tiiiic  (if  (lie  sail'  that  lie  was  dealiuj;  with  a  lartor  as  siicli,  he 
caiiMoi  set  up  any  olaims  on  Ihi-  fador  airaiiist  tlu-  inincipal/''** 
The  spciial  pi-oiu-rty  which  a  factor  aciiuircs  bv  icastii  of  his  lien 
(hx's  not  th'i»r'i\»'  Ilir  ]»i'iiicijial.  as  uciici-aj  o\\  nee,  of  his  rii:;iit  to 
maintain  actions  for  the  injui'v  or  conversion  of  his  !ix<><'<l«-'"  H«' 
may  rocovoi'  them  or  their  \alne  when  tliey  have  been  taken  on 
judicial  ju-ocess  aiiainsl  the  facloi*.'''-  The  |iiinci|ial  may  follow 
the  ^^t)0(ls  or  tlieir  })rocee<ls  in  the  hands  of  tliini  jiei-sons  to  whom 
the  factor  has  disposed  of  llu'in  in  some  way  in  which  he  had  no 
jMiwer  to  do  so,  as  where  the  factor  has  loaned  the  proceeds  of  the 
^'oods  to  one  who  knew  the  fact.^'*^ 

ii>9  Locke  V.  Lewis.  IL'4  Mass.  1;  l',;nry  v.  Vi\ixv.  lo  Cra.v  (.Mass.)  ;{'.)S;  Iliint- 
iujjton  V.  Kuox.  7  Cush.  (Mass.)  -JTl;  lluj^au  v.  Short),  24  Wcud.  (N.  Y.)  458; 
Merrick's  Estate.  5  Watts  &  S.  (I'a.)  J>;  Parker  v.  Donaldson,  2  Watts  &  S. 
d'a.)  <t;    (Jardner  v.  Allen,  ti  Ala.  1ST.     Hut  see  Brown  v.  Morris,  Si  N.  C.  2ol. 

i""Ladd  V.  Arkell,  40  N.  Y.  Super.  Ct.  I'K);  (iuy  v.  Oakley,  VS  Johns.  (N. 
Y.»  3H2;  Darlin;:tou  v.  Chamberlain.  120  111.  r.ST),  12  N.  E.  7S;  St.  Louis  Nat. 
I'.aiiU  V.  K(.s.«.  ;»  Mo.  App.  IVM;  George  v.  Clagett.  7  Tcnn  R.  :io'J;  Cattenill  v. 
lliudlc.  L.  K.  1  r.  r.  ISO;  Dresser  v.  Norwood,  17  C.  I'..  (N.  S.)  400;  C'arr  v. 
Hiuchlit't.  4  Barn.  A:  C.  547.  Though  the  purchaser  kniw  lliat  the  person  he 
was  dealing  with  was  engaged  in  the  business  of  selling  goods  on  commis- 
sion, that  is  not  notice  that  he  sold  as  a  factor  in  that  tninsaction.  lie  may 
presume  that  he  is  selling  his  own  goods.  Schell  v.  Stephens,  50  Mo.  ;57'J.  But 
see  Miller  v.  Lea,  35  Md.  390;   Stewart  v.  Woodward,  50  Vt  7S. 

i»i  Mechem,  Ag.  §§  792,  1045. 

la^  Holly  V.  Iluggeford.  8  Pick.  (Mass.)  73;  Moore  v.  Ilillabrand,  10  Abb.  N. 
('.  (N.  Y.I  477;  Loomis  v.  Barker,  09  111.  300;  Ellsner  v.  Kadcliff.  21  111.  App. 
195;  National  Cordage  Co.  v.  Sims,  44  Neb.  148,  02  N.  W.  514;  Barnes  Safe  & 
Lock  Co.  V.  Bloch  Bros.  Tobacco  Co.,  38  AV.  Va.  158,  IS  S.  E.  482. 

IKS  Shefter  v.  Montgomery,  (i5  Pa.  St.  329.  But  cf.  Lime  Bock  Bank  v.  Plimp- 
ton, 17  Pick.  (Mass.)  159.  And  see  generally,  as  to  following  goods,  Farmers' 
tV:  Mechanics'  Nat.  Bank  v.  King,  57  Pa.  St.  202;  Pitts  v.  Mower.  IS  Me.  301; 
Pottery.  Deunlson,  10  III.  590;  Kdlcy  v.  Muiisdii.  7  Mass.  :;i;t:  \'cil  v.  .Mltchel. 
4  Wash.  C.  C.  105,  Fed.  ("as.  No.  lO.'.MtS;  Thompson  v.  Perkins.  :',  Mason.  232, 
ltd.  ("as.  No.  13,972;  Fahncstock  v.  Bailey.  3  Mete.  (Ky.)  4S.  The  principal 
iiia.v  recover  the  procee<ls  of  his  goods  in  liir  imnds  u(  :i  li.ink  with  wiiicii  they 
liave  been  deposited  by  the  factor  in  an  .■icinnni  sr|i;irair  I'luin  liis  general 
banking  account.  I'.akt  r  v.  I'.miiI;.  Hh*  N.  V.  :;i.  2  N.  i:.  152:  Itichardsou  v. 
'iank,  10  -Mo.  App.  210.  Where  tiic  factor  mingles  tiic  proceeds  of  salt'  of  his 
princi|)jirs  goods  with  his  general  funds,  the  iirinciii.Ml  cannot  follow  them. 
Pri'-c  V.   Kalston,  2  Dall.  i^».     When  a  laclor  assigns  liis  principal's  open  !ic- 


§  V,))     iu<;irr.s  and  liauii.itiks  ok  iMaNciPAL.s  and  tiiikd  pkicsdns.       4u 

Tlic  i-i^li(s  of  (liird  pci-sons  a^aiiisf  jtriixipals  arc  IIk-  coiidalivcs 
of  I  lie  |t(t\\('r.s  of  (lie  fact(ns.  These  have  ali-eady  Iteeii  <liscussei|."" 
A  i)iireliast'r  from  a  factor  may  maintain  an  action  aj^ainst  llie  ]irin- 
cipal  for  nonperfoi-mancc  of  the  contract  of  sale,''''''  or  for  breach 
of  warranty'""  if  liie  warranty  was  one  which  tlie  factor  had 
power  to  malve.^"^  (ioods  sohl  hy  the  factor  witliin  tlie  scope  of 
his  powers  cannot  be  recovered  l)y  tlic^  princii>al  fioin  tlie  ])nr- 
€haser,  tlion^^h  the  factoi-  lias  violated  his  instructions.'"''  The  im- 
jdied  powers  of  a  factor  cannot  be  limited,  as  against  purchasers, 
by  secix't  insl ructions.' '"* 

count  asainst  a  purchaser,  boforo  its  maturity,  and  without  a  dcniand  on  tlic 
principal  to  n-imburse  liini  for  advances,  tlio  assignee  ac(iuires  no  ri^'ht  to  tli<' 
iiccount  aj,'ainst  tlie  principal.  Coujniercial  Nat.  Bank  v.  Ileilbronner,  lOS  N. 
Y.  131),  15  N.  E.  701.  AN'hcre  a  factor  delivers  j::oods  of  his  ininriiial  in  jiay- 
ment  of  his  own  debt,  the  prin(ii)al  may  recover  them,  uotwithstandin;,'  he  is 
indebted  to  the  factor  to  an  amount  as  si'CJit  as  the  value  of  the  goods.  Benny 
V.  Pegram,  18  Mo.  191.  If  a  factor  to  whom  goods  are  consigned  pledges  them 
as  owner,  the  owner  of  the  goods  has  an  immediate  right  of  action  against  the 
pledgee  for  the  goods  or  their  value,  though  the  pledgee  is  innocent;  and  the 
pledgee  cannot  reduce  the  amount  of  judgment  against  him  by  exhibiting  the 
iiccounts  between  the  owner  and  tlie  factor.  Bonito  v.  Mosquera,  2  Bo»w.  (N. 
Y.)  401.  A  party  receiving  of  a  factor  goods  of  his  principal,  in  payment  of  or 
ns  security  for  a  previous  debt  due  him  from  the  factor,  is  liable  to  account  to 
the  principal  for  the  goods,  although  he  did  not  know  that  they  belonged  to  the 
principal.  Warner  v.  Martin,  11  How.  201).  In  an  action  by  a  shijiper  against 
a  carrier  for  damage  to  goods  consigned  to  a  factor,  evidence  that  drafts  drawn 
by  the  plaintilf  for  more  than  the  value  of  the  goods  had  been  accepted  and 
paid  by  the  consignee  was  properly  excluded.  Hill  v.  Railroad  Co.,  43  S.  C. 
4G1,  21  S.  E.  337. 

104  Ante,  p.  3. 

195  Iliggins  V.  McCrea,  IIG  U.  S.  071,  G  Sup.  Ct.  5.j7.  The  autliority  of  factors 
and  brokers  acting  in  the  line  of  their  employment  cannot  be  limited  by  private 
instructions  not  known  to  tlie  iiarty  dealing  with  them.  Lobdell  v.  Baker,  1 
Mete.  (Ma.ss.)  103. 

190  Schuchardt  v.  Allans,  1  Wall.  3.j9;  Andrews  v.  Kneeland,  G  Cow.  (N.  Y.) 
:\rA;  Randall  v.  Kehlor,  GO  Me.  37. 

loT  See  ante,  p.  G. 

19S  Dias  V.  Chickering.  G4  Md.  34S,  1  Atl.  700. 

109  Lobdell  v.  Baker,  1  Mete.  (.Mass.)  193. 


4i  FACTORS.  (§    20 


TERMINATION  OF  THE  RELATION. 

20.  The  relation  of  principal  and  factor  is  terminated 

(a)  By  the  expiration  of  the  time  for  -which  the  agency 
■was  created. 

(h)  By  the  sale  of  all  the  goods  consigned. 

( c  )  By  notice  by  either  party. 

(d    By  the  death  of  either  party. 

EXCEPTION — The  principal  cannot  terminate  the  rela- 
tion, so  as  to  deprive  the  factor  of  his  special  prop- 
erty in  the  goods. 

Tlu'  relation  of  priucipal  and  factor  continues  until  the  ji^oods 
consijjned  to  the  factor  are  sold,  and  the  accounts  settled,  unless 
t  he  agency  is  sooner  terminated  by  expiration  of  the  time  for  which 
it  was  created,  or  in  some  other  manner  in  which  agencies  are  ter- 
minated. In  the  absence  of  a  contrary  agrtnnnent,  a  factor  may 
put  an  end  to  the  relation  at  any  time;  but  he  should  give  reason- 
able notice  to  the  pi-incipal,  and  afford  him  an  opportunity  to  take 
(  harge  of  any  goods  remaining  in  the  factor's  hands.  The  prin- 
cipal may  also  terminate  the  agency  at  any  time,  by  reimbureing 
the  factor  for  advances  made  and  liabilities  incurred;  otherwise, 
the  factor  may  retain  the  priuci]>ars  goods  under  his  lien,  and,  as 
has  been  seen,  sell  enough  to  satisfy  his  charges.-''"  The  death  of 
either  the  factor  or  the  principal  tei*minates  the  relation  except  as 
lo  the  special  property  of  the  factor.  This  is  not  affected,  and  a 
factor  may,  after  the  i)rincipars  death,  sell  to  satisfy  his  lien.^"^ 

200  Ante,  p.  .37. 

201  llaiiuiionds  v.  Barclay,  2  East,  227.  And  sec  .Jackson  Ins.  Co.  v.  Parteo, 
0  llei.sk.  (Teuu.j  2!X;. 


WEHT    I'UBLIHUINU    CO.,  PKINTEUtI  A.NU  HTKUi^UTYlMCUH,  HT.  I'AUL,,  MINN. 


3 

PKJXCIPLES 


OK  THE 


LAW   OF   BROKERS 


A  MONOGRAPH 


St.  Paul,  Minn. 

WEST  PUBLISHING   CO. 

1899 


CorYRIGHT,  1899. 

BY 

WEST  PUBLISHING  COMPANY. 


BKOKERS. 

Section. 

1.  Broker  Defined. 

2.  Bstablislimcnt  of  Kolntion. 

3.  Legnlity  of  Object. 

4.  Inii)li('(l  Powers  of  Brokers. 

5.  IJife'lits  and  Liabilities  of  Brokers. 

G.  Good  Faith— Acting  for  Both  Parties. 

7.  Negligence. 

8.  Following  Instructions. 

9.  Duty  to  Account. 

10.  Kiglit  to  Commissions. 

11.  Bight  to  Reinibur.sement  and  Indemnity. 
12-14.  Right  to  a  Lien. 

15.  Rights  against  and  Liabilities  to  Third  Tersons. 

11).  Rights  and  Liabilities  of  Principals  and  Third  Persons. 

17.  Termination  of  Relation. 

18.  ■Merchandise  Brokers. 

19.  Real-Estate  Brokers. 

20.  Bill  and  Note  Brokers. 

21.  Loan  Brokers. 

22.  Stock  Brokers. 
28.  Ship  Brokers. 

24.  Insurance  Brokers. 

25.  Custom-House  Brokers. 

BROKER  DEFINED. 

1.  A  broker  is  an  agent  who,  for  a  commission  and  usually 
in  the  name  of  a  principal,  negotiates  commercial 
contracts,  including  the  purchase  and  sale  of  real 
and  personal  property.  Brokers  do  not  have  pos- 
session of  the  property  sold  by  them,  except — 
EXCEPTION'S— Stock  and  bill  brokers  may  have  posses- 
sion of  the  property. 

It  is  diffionlt  to  find  a  delinilion  of  a  broker  which  is  accurate  and 
yet  specific  enough  to  be  of  any  value  as  a  definition,^     The  term 

1  See  Black,  Law  Diet.  tit.  "Broker."     A  person  engaged  in  selling  on  com- 
mission, in  a  city,  merchandise  by  sample  for  his  several  principals,  having  an 

BROKERS 1 


2  UKOKKItS. 

'•lutikci""  is  MpplitMl  ill  commtrcial  tr:nis;i(li(»iis  lo  siidi  a  varidy  of 
(livt'isc  occupations  that  it  is  (lillicull  to  foiumlato  nik's  wliicli  will 
pivcru  the  ri^'lils  and  lialiililics  of  brokers  as  a  class.  Cortaiii  t^lasscs 
of  brokci-s.  such  as  bill  biokci-s  and  stock  brokers,  are,  more  accu- 
ratt'l.v  speakinjr.  factors;  ])ut  lluir  desijination  as  brokers  has  become 
unalieiably  fixed  in  coinniercial  iisa}j:e.  The  possession  of  tlie  floods 
is  what  disiin^Miishes  the  factor  from  tlie  sellinji;  broker. 

Dn  the  otlier  hand,  the  so  called  "purchasinii  factor"  is  in  reality  a 
bioker.-  Tawnbrokers  \\lio  loan  llieir  own  money  on  the  security  of 
personal  pioperly  are  not  brokers  at  all,  but  are  i)rinci])als  in  the  busi- 
ness.'' A  broker  is,  in  general,  one  who  buys  or  sells  property  for 
another.  Keal-estate  brokers  are  agents  for  the  sale  and  purchase 
of  real  proi)erty.  Merchandise  brokers  are  those  who  deal  in  per- 
sonal jirojierty  of  a  corjioreal  nature.  The  ])rincipal  classes  of  bro- 
kers dealing  in  incorjioreal  }X'rsonalty  are  stock  brokers,  bill  and  note 
brcdiers,  and  exchange  brokers.  The  business  of  brokers  is  not,  how- 
ever, confined  to  the  purchase  and  sale  of  property.  There  are  insnr 
ance  brokers  who  negotiate  the  making  of  contracts  of  insurance  as 
the  agents  of  the  insured.*  Ship  brokers,  in  addition  to  the  buying 
and  selling  of  shijis.  are  agents  for  the  making  of  charter  parties. 

While  it  is  probable  that  a  broker  might  receive  his  conijiensjition 
otherwise  than  in  the  form  of  commissions,  and  still  retain  his  char- 
acter as  a  broker,  yet  a  salaried  agent  buying  bills  of  exchange  with 
the  money  of  his  principal  cannot  be  re(iuired  to  take  out  a  broker's 
licease.'^ 

office  wb»M('  his  s:iniiil«'S  are  pxliil)ito(l.  is  a  l.tiai  odiiHiitMcial  broker,  though  he 
makes  special  arraiiuenieiits  in  advance  with  tliose  liy  whom  he  is  employetl, 
and  is  their  sole  representative  in  his  city.  Stratford  v.  City  Council,  110  Ahi. 
GIO,  20  South.  127. 

-  See  nionof;rapli  on  Factors,  p.  2. 

3  City  of  Little  Kock   v.  Ilarloii.  :V.\  Ark.  4.".t!.  4.">0. 

*  Insurance  brokers  are  the  ajieiUs  of  the  insured;  insurance  agents  are  tlie 
agents  of  the  insurer.  Hartford  Fire  Ins.  Co.  v.  Reynolds,  'M  Mich.  ii(i2;  Miller 
V.  Insurance  Co.,  27  Iowa,  2<K'!. 

sCitv  of  Portland  v.  O'N.'ill.  1   Or.  218. 


ESTABLISHMENT    OF    RELATION, 


ESTABLISHMENT  OF  RELATION. 

2.  The  relation  of  principal  and  broker  is  established  in  the 
same  ways  as  other  agencies.     The  broker's  author- 
ity need  not  be  in  -writing,  except — 
EXCEPTION— In  California,  by  statute,  a  broker's   au- 
thority to  sell  real  property  must  be  in  w^riting. 

The  establishment  of  a  broker's  authority  differs  in  no  material  re- 
fipect  from  the  ci-f^ation  of  any  ordinary  a«;ency.°  A  broker  cannot, 
of  course,  bind  by  contract  one  whom  he  has  no  authority  to  repre- 
sent. If  the  supposed  principal  subsequently  ratifies  the  contract, 
the  broker  may  become  entitled  to  connnissions.^  But  a  broker  can- 
not, by  sendinj^-  a  imrchaser  to  the  owner  of  property,  who  has  given 
the  broker  no  authority  to  act  for  him,  claim  commissions  if  a  sale  is 
consummated.  The  broker  must  show  an  appointment  as  a  broker, 
or  he  is  not  entitled  to  the  rights  arising  out  of  the  relation.^ 

Ordinarily,  the  autlioiity  of  a  broker  may  be  granted  by  parol. 
Thus,  a  real-estate  broker,  having  no  written  authority,  may  sign  a  con- 
tract binding  his  principal  to  sell,  and  specific  performance  of  the  con- 
tract can  be  enforced  against  the  principal.®  In  such  a  case,  also,  the 
broker,  acting  under  a  parol  authority,  can  recover  commissions.'" 
But  it  is  provided  by  statute  in  some  states  that  an  agreement  author- 
izing or  emi)loying  an  agent  or  broker  to  purchase  or  sell  real  estate 
for  compen.^^ation  shall  be  invalid  unless  some  note  or  memorandum 
thereof  is  made  in  writing,  and  subscribed  by  the  party  to  be  charged, 
or  by  his  agent.^^     Under  such  a  statute,  a  broker  who  has  no  written 

"  A  partnership  may  act  as  a  broker.  Bromley  v.  Elliot,  38  N.  H.  287.  :'.<»;». 
The  principal  must  be  competent  to  contract.  Cavender  v.  Waddingham.  'j  Mo. 
App.  457:  Twelfth  St.  Market  Co.  v.  Jackson,  102  Pa.  St.  2G9:  Keys  v.  Jolin- 
i?on,  G8  Pa.  St.  42;  Holley  v.  Townsend,  16  How.  Prac.  (N.  Y.)  125;  Hinds  v. 
Henry,  36  N.  J.  Law,  32S. 

-  Pierce  v.  Thomas,  4  E.  D.  Smith  (X.  Y.)  3.>4;  Sibbald  v.  Iron  Co.,  S3  N.  Y. 
578;   Lyons  v.  Wait,  51  N.  .T.  Eq.  GO,  26  Atl.  334. 

8  Pierce  v.  Thomas,  4  E.  D.  Smith  (X.  Y.)  354.     And  see  post,  p.  21. 

9  Dickerman  v.  Ashtou.  21  .Minn.  .538;  Brown  v.  P:aton,  Id.  409;  Worrall  v. 
Munn,  5  X.  Y.  229. 

10  Fiero  v.  Fiero,  52  Barb.  (X.  Y.)  288;    Fischer  v.  Bell,  91  Ind.  243. 

11  Civ.  Code  Cal.  §  HJ-2A;   Revision  X.  J.  p.  44G,  §  10. 


•1  BROKERS. 

;iiitlioi-ity  cMiiiiot  ircnv(>r  coininissiuus.  ihou^li  llu-  jiiiiK  ijiiil  h;is  cum 
|ili  It'll  ilic  salr  iHjidi  inird  [)\  till'  ltink(  r.  ciilici-  nil  tlic  (^'Xpii'ss  oral 
roulrart  or  on  a  <iiiaiil mil  iiii'rui(.'- 

LEGALITY  OF  OBJECT. 

3.  Where  a  contract  made  by  a  broker  is  illeg'al,  it  cannot 
be  enforced  by  the  parties  to  it;  nor  can  the  broker 
recover  for  services  and  expenses  if  he  was  privy  to 
the  illegal  intent. 

Whon  the  business  in  wliicli  a  brokci-  is  engajjed  is  illeg.il,  the  con- 
tracts made  tliroup:!!  liim  are  not  cntorceable  by  the  |iarties  to  thcni. 
AtuI.  as  in  the  case  of  other  illej;al  contraets,  the  law  leaves  tlie  parties 
as  it  Ihids  thera.^^  But,  if  the  broker  has  money  in  his  hands  belong- 
ing to  liis  jirincipal,  he  cannot  retain  it  on  the  ground  that  the  trans- 
action through  which  he  received  it  was  illegal.^* 

Jlarrlagf  l^rokcvagv. 

A  marriage  brokerage  contract  is  an  agreement  lor  ilie  ])ayment  of 
money  or  other  compensation  for  the  procurement  of  a  marriage.  Al- 
though there  may  be  no  fraud  practiced  on  eithei-  party  to  the  mar- 
riage, such  colli racts  are  held  void  as  being  against  j)nblic  jKilicy.''' 
Neither  the  amount  agreed  to  be  paid  for  procuring  ihe  marriage  nor 
money  advanced  on  account  of  it  can  be  recovei-ed.'" 

12  McCarthy  v.  Loupe.  02  Cal.  "JOO;  Myres  v.  Sunylmc.  07  Cal.  (!.".7.  S  Pac. 
52.3;  Shanklin  v.  Il.all.  100  Cal.  20,  ;M  T.-ic  (VIO:  Moiulciiliall  v.  Kose  (Cal.)  .'].'{ 
Pac.  S.S4.  Hut  see  Griltith  v.  Daly,  50  X.  J.  Law,  400.  20  All.  109.  Though 
Gen.  Laws  .Minn.  1887,  c.  20,  requires  the  authority  <if  an  a^rent  to  sell  land 
to  be  in  writing,  where  an  agent  has  performed  his  part  uf  a  i>anil  contract  to 
sell  land  he  Is  entitled  to  his  compensation  thereunder,  \aiigliaii  v.  McCarthy, 
5'J  -Minn.  lOJJ.  00  N.  W.  107.^. 

la  Clark,  Cout.  470. 

1*  Tenant  v.  Elliott,  1  Bos.  &  P.  3;  McBIair  v.  Cilihcs.  17  IIuw.  2;!2;  \\\\\- 
strong  V.  Toler.  11  Wheat.  258;    Com.  v.  Cooper,  l.'{0  .M.-iss.  2.S.".. 

15  White  V.  Benellt  Union,  70  Ala.  251;  Crawford  v.  Ku.ssi'li.  wi  it.irb.  iN. 
V.)  112;  John.son  v.  Hunt,  81  Ky.  .'{21;  Hall  v.  Potter,  :'>  \.v\.  112:  I>niry  v. 
Ilooke,  1  Vern.  412;  Cole  v.  Gibson,  1  Ves.  .Sr.  .50;{;  Deheiilmiii  v.  Ox,  Id.  270; 
\Wx  V.  Thorp,  5  Mod.  221;  Smitli  v.  Hniiiliig.  2  Vern.  ;{Ii2.  \\\i\  .f.  Hoynlnii  v. 
Hubbard,  7  Mas.x.  112.  118. 

»«  Crawford  v.  KuBseh,  02  Barb.  (\.  Y.)  l>2;   Johnson  v.  Hunt,  81  Ky.  ;{21. 


LKOALITY    OF    OIUECT.  5 

Dealing  in  Fnlnrrs. 

The  class  of  contraHs  made  by  brokers  in  wliicli  llif  fineH<ion  of  Ihc 
legally  of  the  tiansaclioii  is  iiiosi  often  rais<'(l  cinhrMccs  lliose  made  on 
the  produce  or  slock  exchange  fitr  llie  purchase  or  sale  of  grain,  sto<ks, 
etc.,  for  fill  lire  delivery.  Such  a  contract  is  valid,  llioiigh  there  is  an  op- 
tion as  to  Ihe  time  of  delivery, and  thougli  the  seller  has  no  other  means 
of  getting  the  jiroperty  than  to  go  into  the  market,  and  buy  it ;  *^  but 
if,  under  the  guise  of  such  a  contract,  valid  on  its  face,  the  real  pur- 
pose and  intention  of  the  parties  is  merely  to  speculate  in  the  rise  or 
fall  of  prices,  and  the  goods  are  not  to  be  delivered,  but  the  difference 
between  the  conlract  and  market  price  only  paid,  then  the  transaction 
is  a  wager,  and  the  contract  is  void.^*  It  is  not  enough  to  render  the 
contract  void  that  one  party  only  intended  by  it  a  speculation  in 
prices;  it  must  be  shown  that  both  parties  did  not  intend  a  delivery  of 
the  goods,  but  contemplated  and  intended  a  settlement  only  of  dilfer- 
ences.^"  The  burden  of  showing  the  validity  of  the  contract  rests 
upon  the  party  asserting  it.-° 

17  Crawford  v.  Spencer,  92  Mo.  498.  4  S.  W.  7i:5;  Story  v.  Salomou,  71  N.  Y. 
420;  Bigelow  v.  Benedict.  70  N.  Y.  202;  Cole  v.  Milmiue,  S8  111.  340;  Wok-ott 
V.  Heath,  78  111.  43.'};  AA'all  v.  Sclmelder,  59  Wis.  352,  18  N.  W.  443;  Gregory 
V.  Wattowa,  58  Iowa,  711.  12  N.  W.  726;  Bartlett  v.  Smith,  4  McCrary,  388,  13 
Fed.  2G3;  Cobb  v.  Prell,  15  Fed.  774.  "The  right  to  buy  graiu  in  the  market, 
in  the  hope  to  profit  by  a  ri.se  in  the  market  value,  is  as  plain  as  the  right  to 
buy  wild  lands  or  any  other  property."     Gregory  v.  Wendell,  40  Mich.  432. 

IS  Irwin  v.  Williar,  110  U.  S.  499,  4  Sup.  Ct.  100;  Gregory  v.  Wendell,  39 
Mich.  337;  Lyon  v.  Culbertson,  83  111.  33;  Cothran  v.  Ellis,  125  III.  496,  16  N.  E. 
646;  Maxton  v.  Gheen,  75  Pa.  St.  166;  Kirkpatiick  v.  Bousall,  72  Ta.  St.  155; 
Everingham  v.  Meighau,  55  Wis.  354,  13  X.  \^'.  2tj9;  Lowry  v.  Dillman,  .59  Wis. 
197,  18  X.  W.  4;  Bullard  v.  Smith,  139  Mass.  492,  2  X.  E.  80. 

19  Fixley  v.  Boynton,  79  111.  351;  Gregory  v.  Wendell,  39  Mich.  337;  White- 
sides  V.  Hunt,  97  Ind.  191;  Bangs  v.  Hornick,  30  Fed.  97;  Williams  v.  Tiede- 
mann,  0  Mo.  App.  2G9;  Jones  v.  Shale,  34  Mo.  App.  302.  Contracts  between 
a  stock  broker  and  a  customer  for  buying  or  selling  stocks  upon  a  margin,  in 
the  hope  of  profit  from  fluctuation  in  price,  are  not  illegal,  when  the  broker  ex- 
pects the  final  balance  to  be  liquidated  by  a  delivery  of  the  remaining  stocks, 
and  keeps  command  of  sufficient  stock  to  make  delivery  on  demand,  and  at  the 
end  of  the  last  deal  actually  transfers  the  remaining  stock  to  his  customer's 
order.     Dillaway  v.  Aldeu,  88  Me.  230,  33  Atl.  981.     If  stock  purchased  by  a 


20  Irwin  v.  Williar.  110  V.  S.  499.  4  Sup.  Ct.  160;    Cockrell  v.  Thompson, 
^  Mo.  510;    Crawford  v.  Spencer,  92  .Mo.  498,  4  S.  W.  713. 


(>  IIKOKKHS. 

ir.  ill  ;i  roniial  cdMUiiri  for  ilic  |iiinli;is»'  ami  sale  (if  iiiri cliaiKlisr  \if 
1m'  (lfli\  »'i«'(i  in  the  future  at  a  lixcd  inirc,  ii  is  adiially  iIk-  ai^rct'iucnt 
nf  ilic  paitics  thai  tlic  nn'nliaM(lisc  shall  not  he  (h'liscicd  and  the  price 
paiih  Imii  iliat.  when  the  slipuialrd  time  f<M'  pcrfcMinancc  anivcs,  n 
set  I  Iciiirnt  shall  lu'  made  liv  a  iiavnicnl  in  iiiom-v  of  llic  tiilVcifnct'  be- 
tween the  eoutraet  juice  and  ilie  niai  kei  juice  of  ilic  iiierchandis*'  at 
that  tiuH",  this  ajjreoment  makes  the  coni  laci  a  \\aueiiim  i  oiitract.  If, 
howevor,  it  is  ajifeed  h,v  the  pa  it  ies  I  ha  I  i  lie  conii  act  shall  l»e  |iei-formo(i 
according  to  its  teiiiis  if  eiilicr  parlv  rtMpiircs  ii.  and  that  eilliei-  party 
shall  have  the  lij^lit  to  reiiuire  it.  the  contiaci  does  not  l)ecoino  a 
w  a;j;erinjjf  eoutraet  because  one  or  both  of  the  parties  intend,  when  the 
lime  for  peiformanoe  arrives,  not  to  re<piire  ])erfonnanee,  but  to  substi- 
tute tluM-efor  a  settlement  by  tlie  ]iaymenl  of  the  (bll'cirnce  between 
the  contract  jirice  and  the  market  jirice  at  that  time.  Such  an  intei>- 
tiou  is  iimnaterial,  exce]»t  so  far  as  it  is  made  a  part  of  tlu'  contract,  al- 
thoiiiih  it  need  not  be  made  expressly  a  part  of  the  contract.  To  con 
stitute  a  waj^erinj;  coulract.  it  is  suflicient,  whatever  may  be  the  form 
of  tlie  contract,  that  both  parlies  iiuderstand  and  inteml  tliat  one 
party  shall  not  be  bound  to  deliver  the  merchandise,  ami  the  other  to 
receive  it  and  to  pay  the  price,  but  that  a  settlement  shall  be  made  by 
the  payment  of  the  ditTereiice  in  i)rices.-^ 

The  il|e«;ality  of  wagers  on  tiie  lluctualions  of  the  market  dejiends 
on  statutory  provisions  in  the  several  states.^^  In  some  states  the 
provisions  are  broader,  and  every  contract  for  the  sale  or  transfer  of 
stock  or  lionds  of  a  state  or  corp(tration  is  void,  unless  the  \'endor  is,  at 
the  lime  of  inakinji  the  contract,  the  owner  or  assij;inM'  of  the  stock 
or  bonds,  or  an  ajicnt  authori/,ed  to  sell.-''     The  Illinois  sialiite  forbids 

broker  lor  another  is  (■.•illc(l  for  l)y  tlic  jailer.  .iihI  an  .iiiiial  lender  lliercof  matte, 
he  is  not  exempted  from  li.aliilily  for  ilie  price  by  llie  fact  tlial  llie  .stock  was, 
In  the  tirst  place,  liouKlit  for  him  l>y  liie  brolier  on  a  maij,'in.  Anthony  v. 
TnauKst,  174  I'a.  St.  10.  :{4  All.  l'S4. 

-1  Harvey  v.  Merrill,  ir.0  .Mass.  1,  I'li  X.  E.  4!>;  Itarnes  v.  Smilii.  l.'.O  Mass. 
.'.It.  :!4  .\.  K.  40:',;    Iteadles  v.  .MeKIialh.  .S.->  Ky.  L'.'50.  .*!  S.  W.  ^:>•2. 

-■-  full.  A<ls  Mieli.  1S.S7,  .No.  tllli;  .Sanli.  A:  It.  .\im.  St.  Wis.  IsSi),  §  2:'.10a; 
i.aws  Ohio.  lss.->.  |).  L'.")4;  Laws  Te.x.  IHST,  e.  l.":;  .Mansf.  Iti-.  Ark.  §  1S48; 
Lawft  .Mi.ss.  1.S.SL'.  e.  117;   Acts  Tenn.  l.SS.'{,  e.  li.'.l. 

-  ••  I'lil..  SI.  .Mas.s.  c.  78,  S  (i;  Acts  S.  C.  ISKl.  No.  :\iM\,  p.  4.71,  S  I  (unh'ss  there 
,-  a  lioiia  ll(I»'  hitentioD  to  make  a  delivery).  .V  siniil.ar  |»rovision  In  .New  York 
was  repealed  by  Laws  1858,  c.  l.!l.     'Jliese  siaiules  have  been  construed  lu  the 


IMl'l.lKD    rOWKItS    TO     HKOKKRS.  / 

contracts  for  options  (o  Itiiv  or  sril  a(  n  fiiliiic  "iiiiv  '^\:\\\\  or  ollior  com- 
modity, stock  of  any  railroad  or  oilier  coiiiiiaiis ,  oi-  ^^oid';-^  that  is, 
the  sale  of  "puts"  and  "calls"  is  uiado  illegal.-'' 

IMPLIED  POWERS  OF  BROKERS. 

4.  A  broker  has  such  implied  po-wers  as  are  necessary,  ac- 
cording to  the  usage  of  the  business,  to  accomplish 
the  object  of  the  agency.  These  powers  will  be  dis- 
cussed under  the  following  heads: 

(a)  To  act  in  his  own  name. 

(b)  To  fix  price. 

(c)  To  sell  on  credit. 

(d)  To  warrant. 

(e)  To  sign  contract  for  both  parties. 

(f)  To  delegate  authority. 

(g)  To  receive  payment. 

(h)  To  rescind  or  submit  to  arbitration. 

Pmcer  to  Act  In   llix   Oini   JVanw. 

According  to  the  usage  of  business,  brokers,  as  a  general  rule,  make 
their  contracts  in  the  names  of  their  principals.-®  But  stockbrokers 
usually  act  in  their  own  names  in  buying  and  selling,  and  in  many 
instances  never  disclose  the  names  of  their  principals  at  all.^^ 

following  cases:  Stebblns  v.  Leowolf.  3  Cush.  (Mass.)  137;  Barrett  v.  Hyde,  7 
Gray  (Mass.)  1(J0;  Barrett  v.  Mead.  10  Allen  (Mass.j  :j;{7;  Brown  v.  Phelps,  103 
Mass.  313;  Price  v.  Minot.  107  Mass.  49;  BuUard  v.  Smith,  139  Mass.  492,  2 
N.  E.  86;  Gram  v.  Stebbins,  G  Paige  (N.  Y.)  124;  Frost  v.  Clark.-^on,  7  Cow.  (N. 
Y.)  24. 

24  Rev.  St.  1893.  c.  38.  §  130.  And  see  Pickering  v.  Cease.  79  111.  3l.'8;  Pixley 
V.  Boynton,  Id.  351;  Sanborn  v.  Benedict,  78  111.  309;  Wolcott  v.  Heath.  Id. 
433. 

-T.  A  "put"  is  a  contract  which  gives  an  option  to  sell  or  not  at  a  certain  price. 
A  "call"  gives  an  option  to  bny  or  not.     Black.  Law  I>ict.  tit.  "Tnts  and  Calls." 

2  6  Saladin  v.  Mitchell,  45  111.  79;  McKiudly  v.  Dunham.  55  Wis.  515.  13  N. 
W.  485;  Evans  v.  Wain,  71  Pa.  St.  69;  Graham  v.  Duckwall,  8  Bush  (Ky.) 
12;  Brown  v.  Morris,  83  N.  C.  254.  When  a  broker,  not  intrusted  with  pos- 
session, contracts  in  his  own  name,  payment  to  him  will  not  relieve  the  pur- 
chaser from  liability  to  the  principal.     Crosby  v.  Hill.  ."9  Ohio  St.  100. 

'^  !Markham  v.  Jaudou,  41  >*.  Y.  235;   Hoitou  v.  Morgan,  19  N.  Y.  170. 


b  BROKERS. 

/',,t/\rs   .^Tv•, .S.SV7/V/  to  Accmnj)Ji(<h    Ohjtct. 

\\\\v\\  a  broker  is  employed  to  condiiot  a  ncf^oiiation.  the  prinoiiinl. 
l».v  iiupliration,  clothes  liini  with  all  the  poweis  which  aic  nsiial  and 
necessary  for  the  snccessfiij  transaction  of  the  business.  What  tliese 
powers  are  will  dcpen<l  in  each  case  on  llie  nature  ol'  ihe  liroker's 
euiiildynienl.  \\'itliin  tlu'  sc(>pe  of  liis  eni|)lnyuieiil,  he  has  power  to 
bind  his  princi])al  by  whatever  contract  the  carrying  out  of  the  laltei-'s 
commission  may  require.** 

The  implied  powers  of  brokers  are  fixed  almost  entirely  by  custom 
or  usage.  This  is  especially  true  when  the  broker  is  dealing  in  ^i 
regular  market  as  a  member  of  a  board  like  a  stoik  e.xchangt  or  a 
board  of  trade.  The  rules  of  such  body  enter  into  all  the  contracts 
made  by  the  broker,  and  are  binding  on  his  principal.  A  i)erson  who 
deals  in  a  particular  market  must  be  taken  to  deal  according  to  the 
known,  general,  and  uniform  custom  or  usage  of  that  market;  and  he 
\sliu  employs  another  to  act  for  him  at  a  particular  place  or  market 
must  be  taken  as  intending  that  his  business  shall  be  done  according 
to  the  usage  of  that  market,  whether  he  in  fact  knew  of  the  usage  or 
not.-®  There  are,  however,  certain  reasonable  limits  to  the  powers 
which  may  be  conferred  by  usage.  No  usage  is  admissible  to  control 
rules  of  law''"  or  the  provisions  of  an  express  contract.'"  A  usage 
which  causes  the  bi-oker  to  assume  the  rehition  of  a  princij)al  to  those 

28  Le  Ro.v  V.  Beard.  8  IIow.  A7A\  Star  Line  v.  Van  Vliet.  4.'?  Mich.  .•5»i4.  o  N. 
W.  418:  Sala.lin  v.  Mitchell,  45  111.  79;  Craijihcad  v.  Pet.'rs,)ii.  72  X.  Y.  270: 
.McBeau  v.  I'ox.  1  111.  App.  177;  Beuniughoff  v.  Iiisurauce  (\^..  !•;;  .\.  V.  41K>: 
Lawrence  v.  (iallagher,  42  N.  Y.  Super.  Ct.  309:  Benjamin  v.  Benjamin,  15 
Conn.  .*i47;  Ilnntley  v.  Matliias.  KG  N.  C.  101;  llanlee  v.  Hall.  12  Bush  (Ky.) 
327;  Shackiuau  v.  Little,  S7  Iiul.  181:  M(Ali)in  v.  C'assidy.  17  I'cx.  UK;  Boyd 
V.  Satteiwhite.  10  S.  C.  45. 

-x  Lyon  V.  Cnlbertsou,  83  111.  :v.\:  United  States  Lifi-  Ins.  Co.  v.  Advance  Co.. 
SO  111.  540;  Bailey  v.  Bensley,  87  111.  550;  Hoiton  v.  Moijjan.  19  N.  Y.  170; 
Lawrence  v.  Maxwell.  53  N.  Y.  19;  Nourse  v.  Trinie.  4  .lelins.  Cli.  (N.  Y.)  490; 
Itosenstoek  v.  Tornicy.  ;'.2  .Mil.  1<;9;  l»ui;nil  v.  I'.iiii.  '.»s  .M.iss.  KM;  Siunnrr  v. 
Stewart.  09  I'a.  St.  .•521;    Sutton  v.  Tatliani.  lo  Adol.  iV:  K.  27. 

^•0  Wheeler  v.  Newl)Ouhl.  10  N.  Y.  :\\\2;  Hi«:>:ins  v.  Moore.  ;;i  N.  V.  n7; 
r.owen  V.  Newell.  8  N.  Y.  I'.MJ. 

•>  Clark  V.  Baker,  11  Mete.  (Mass.;  180;  Blacken  v.  Assuranic  Co.,  2  Tyrw. 
200. 


IMI'I.IKU    I'OWKU.S    TO    BUOKKUS.  •' 

eniployiii;^  him  is  iiixaiid.'-'  So,  a  prin(i|)iil  is  not  bound  by  a  iisaj:*'  of 
brokers  when  dealing;-  witli  hiokns  in  aiiollicf  <i(.v  to  pnl  all  the  trans- 
actions betwfen  thoin  into  one  account,  and  to  sr-tllc  tlic  ^M'n<Mal  bal- 
anco.-'-*  Nor  can  a  Mtockbrokci-  justify,  on  tlio  authority  of  usaj^c,  a 
sale  of  stock  held  by  him  lu  secure  advances,  without  notice  to  his 
principal.^* 

Powtr  to  Fix  P/'ice. 

When  a  broker  is  ordered  to  sell  or  purchase  property  for  his  prin- 
i;ipal  without  any  instructions  as  to  the  price,  he  has  imphed  power  to 
fix  the  price.  This  is  ordinarily  the  case  with  merchandise  and  stock 
brokers.  Their  princij)als  rely  on  tliem  to  get  the  best  prices  possible 
in  the  market.  With  puichases  and  sales  of  real  estate  throu<^h  l)ro- 
kers  the  price  is  almost  always  fixed  by  the  principal,  though,  if  a 
broker  receives  an  order  to  buy  or  sell  a  certain  piece  of  land  witliout 
any  instructions  as  to  price,  he  would  probably  have  power  to  fix  the 
price.  Whenever  a  broker  fixes  the  price,  it  must  be  the  market  price 
if  there  is  a  market  price,  and,  if  not,  the  price  must  be  reasonable,  and 
the  best  that  the  broker  could  obtain.^' 

Power  to  Sell  on  t'i'<dlt. 

A  broker  has  an  implied  power  to  sell  on  credit  when  such  is  the 
usage  of  the  trade  in  which  he  is  engaged.  The  length  of  the  credit 
depends,  like  the  power  itself,  on  that  usage.  Dealings  on  the  stock 
market,  however,  are  usually  for  cash;  and  therefore  a  stock  broker 
cannot  give  credit  without  an  express  authority  from  his  principal  to 
do  so.^* 

3  2  Kobiusou  V.  Mollflt,  L.  R.  7  H.  L.  802. 

33  Evans  v.  Wain,  71  Pa.  St.  (J9. 

34Alleu  v.  Dykers,  3  Hill  tN.  Y.)  593;  Whoeler  v.  Newhould.  10  X.  Y.  .302: 
Markhaiu  v.  .Taudou,  41  N.  Y.  235;  Pickeriug  v.  Deiumritt.  100  Mass.  421;  Day 
V.  Holmes,  103  Mass.  300. 

35  No  a(l.judicatcd  case  has  been  found  in  which  the  power  of  a  broker  to  fix 
the  price  has  been  in  controversy,  but  the  rules  stated  in  the  text  are  sanctioned 
by  usage  and  by  a  like  power  possessed  by  factors.  See  monograph  on  Factors, 
p.  o. 

3c  Delafield  v.  Illinois.  20  Wend.  (N.  Y.)  102;  Wiltshire  v.  Sims,  1  Camp.  258; 
Buormau  v.  Brown,  3  Q.  B.  511. 


10  UHOKKUS. 

Pinrrr  A<   Witrriinf. 

Will  ii»\(i-  the  nistoni  iif  ;i  lull  til  iil;ir  li;i(l«'  is  to  <,'ivp  :i  warninly  to 
jmrclijisi-rs.  luttkcis  »l«;iliii^'  in  tluit  kind  of  propcity  have  an  implied 
p«iu«r  to  wanani.  NNInn  tlinc  is  no  sndi  usa;:«'.  lln-  powi  r  (I(ms  not 
I'xist.''  Tims.  \\\u\\  a  lnokrr  si-ils  liv  saniplr.  \u-  may  waiiant  tin* 
quality  of  the  \hmh\»  as  rtpial  \o  the  samplr.  "  Itnt  it  has  boon  lultl 
that  a  Iti-okcr  lias  no  power  to  warrant  a;:aiiist  a  latent  (lefcct  present 
in  tlu'  siunph'  ilst'lf.^" 

/'>?/•//•  to  Sign  Contract  for  l]>>t}i  l\irti,s. 

AI<'r(lian(lis<' *"  and  stock  luokeis/'  when  they  inako  contracts  for 
their  principals,  an*,  so  far  as  the  statute  of  frauds  is  coiiccrnc*!.  a;i«*nts 
for  lioib  [larties.  When  so  acting',  they  have  anthorify  to  do  all 
that  is  ueirssiiry  to  bind  the  liar;:ain.  and  hence  may  si;,Mi  the  requisite 
memorandum. *-  In  this  country  it  is  customary  for  the  broker  to 
make  an  entry  of  the  siile  in  a  book  kept  for  that  purpose,  and  such 
an  ♦ntry.  if  it  contains  the  terms  of  the  bai«,'ain,  is  a  siilVuient  memo 
randiim.*^  n(»i-  need  it  In-  si^'iie<l  l»\  the  ln-oker.''*  A  note  conlainin;; 
the  terms  of  the  haruain.  and  delivered  by  him  to  either  party,  is  also 

»7  Ahem  v.  Goodspoed,  ~'l  N.  Y.  ms;  Nelson  v.  Cdwin-.  i;  Hill  (N.  Y.)  .l^Ui; 
.*<tiir;:is  V.  Sfo.'iinlutat  Co..  tlL*  N.  Y.  <<2ri.  It  is  bcld  iu  .MassucUusetts  that  evi- 
dence (if  nsa;re  is  inadmissible  to  establish  such  implied  power.  Dodd  v.  Kar- 
low,  11  Allcu.  42t>;    Boardnian  v.  Spooner.  13  Allen,  353. 

3*  Andrf'ws  v.  Knecland.  ♦!  Cow.  (N.  Y.>  3M;  Boorman  v.  Jenkins,  12  Wend. 
(N.  Y.)  5<ki:    WariUK  v.  .Mason.  18  Weud.  (N.  \.)  420. 

»»  I»i<kiuson  V.  (Jay,  7  Allen  (Mass.)  2'.>. 

««  Sn.vdain  v.  Clark.  2  Sandf.  (N.  Y.)  l.'W;  Peltier  v.  Collins.  3  Wend.  (.N.  Y.> 
■ir.I»;    I»:ivis  v.  .^iJiields.  2t>  Wend.  (N.  Y.)  341. 

«i  Colvin  v.  Williams.  3  liar.  A:  J.  (Md.)  3S. 

*2  Coddin^ton  v.  (ioddard.  10  CJray  (Mass.)  43(i.  Hut  where,  upon  the  mak- 
ing of  a  contract  of  sale  and  purchase,  a  broker  acts  merely  to  bring  the  parties 
together,  after  which  they  negotiate  with  each  other  dirivtly,  the  broker  lias  no 
jMjwer  to  bind  them  by  meniorand;i  signe«l  by  him.  Aguirre  v.  .Mien.  10  Harb. 
iN.  Y.)  74.  The  actual  signing  of  the  memorandum,  being  merely  a  ministerial 
act,  may  b*-  by  the  broker's  clerk.     Williams  v.  Woods,  PJ  .Md.  22o. 

*»  Coddlngton  v.  (Joddard,  Ki  (Iray  i.Mii><.i  l.u;;  (Mason's  K.x'rs  v.  Pailey.  14 
Johns.  (N.  Y.j  4S4;  Merritt  v.  Clason.  12  Jolms.  (N.  Y.)  102;  Sale  v.  Uarragh. 
2  mil.  iN.  \.)  IM;  Williams  v.  W(»o(Is.  IC  Md.  22i»:  Haeon  v.  Kecles,  43  Wis. 
22 1 . 

««  Coddlngton  v.  Coildard.  k;  «.'ray  »Ma>.s.i  4;!t',:  .Merritt  v.  Clason,  12  Johns. 
(N.  v.;  102;   Cla»ou*»  i:.\rb  v.  IJalley,  14  Johns.  u\.  Y.)  48-1. 


JMI'I.IKU    roVVKKS    TO    HUOKKRH.  11 

Hiillii  ictit/'  IlKnijili.  if  lie  delivers  to  biivcr  .'ind  solNr  notes  which  ma 
It  rially  <lillVr,  lh<'i<'  is  no  valid  nn'Mioianthim/" 

In  Knf^iund  it  is  cusloniarv  foi-  tlu-  broker,  wIumi  he  makes  a  con 
tract,  to  iH'dnce  it  to  wrifin^\  and  lo  deliver  to  each  party  a  copy  of  the 
terms  as  reduced  to  wiiiin;:  li\  liini,  and  ais(»  to  entei-  tlieni  in  his 
book  and  to  si^ni  the  entry. ^'  As  to  the  elTect  of  tlie  entry  in  the 
broker's  book,  there  has  been  j2;reat  difference  of  ojjinion.  The  view 
which  seems  to  have  prevailed,  unlike  that  adojited  in  this  countr}%  and 
founded,  peihajis,  in  sonx'  measure  on  the  fact  that  brokers  in  Ixindon 
were  until  recently  required  by  law  lo  make  such  entries,  is  that  the 
entry  constitutes  the  contract  itself,  and  is  a  contract  in  writinj^.**  It 
is  natural,  therefore,  that  diflicult  questions  have  arisen  in  England, 
where  the  sold  note  and  the  bought  note  difTer  from  each  other  or  from 
the  entry  in  the  broker's  book.  The  result  of  the  English  decisions 
on  this  point,  which,  owing  to  the  difference  in  the  law  and  the  custom, 
are  of  comparatively  little  value  as  precedents  in  this  country,  may  be 
briefly  stated  as  follows:  *^  (1)  Tf  the  broker  make  and  sign  an  entry 
of  the  agreement  in  his  books,  the  entry  so  signed  constitutes  the 
original  agreement  between  the  jiarties.  and  is  the  primary  evidence 
thereof,'"  to  the  exclusion  of  any  notes  which  may  be  delivered  to  the 

■••■  Butler  v.  Thomson,  02  U.  S.  412:  Bibl)  v.  Allen,  149  U.  S.  481,  13  Sup.  Ct. 
ftr.0:  Uciniclv  v.  S.iiulford.  118  .M;iss.  102:  Newberry  v.  W;ill.  S4  N.  Y.  57«: 
Weidmaun  v.  CliMiuiiion.  12  D.-il.v  (N.  Y.)  522;   Bacon  v.  Eccles.  4:'.  Wis.  227. 

<«  Peltier  v.  Collins,  :\  Wend.  (X.  Y.)  4.")9:  Sxiydara  v.  Clark.  2  Sandf.  (N.  Y.> 
133;  Bacon  v.  Eedes.  43  Wis.  227;  Bibb  v.  Allen.  14'»  U.  S.  481,  13  Sup.  Ct. 
050.  per  .Jackson.  .7. 

•»"  Benj.  Sales,  §  27t). 

*>-  Heyman  v.  Xeale.  2  Camp.  337,  per  Lord  Ellenborough;  Thornton  v, 
Charles,  9  Mees.  &  W.  802,  per  Parke,  B.;  Sievewright  v.  Archibald,  17  Q.  B. 
115,  20  Law  .L  Q.  B.  520,  per  Lord  Campbell.  C.  J.,  and  Patterson,  J.;  Thomp- 
son v.  Gardiner,  1  C.  P.  Div.  777;  Thornton  v.  Meu.x,  Moody  &  M.  43,  per 
Abbott.  C.  J.;  Townend  v.  Drakeford,  1  Car.  &  K.  20,  per  Denman,  C.  J.; 
Thornton  v.  Charles,  supra,  per  Lord  Abinger.  But  these  authorities  are  over- 
ruled by  Sievewright  v.  Ai-chibald,  supra.  Benj.  Sales,  §  2t>4.  See  Langd.  Cas. 
Sales,  1035.  The  view  was  lu'ld  by  some  judges  tliat  the  entry  not  only  did  not 
constitute  the  contract,  but  was  not  even  admissible  in  evidence,  at  least  not 
without  proof  that  it  was  seen  by  the  parties  when  they  contracted  or  was 
assented  to  by  them.     Cumming  v.  Roebuck.  Holt  N.  P.  172.  per  Gihbs,  C.  J. 

■•9  The  statement  is  taken  from  Kerr,  Dig.  Sales,  g  20.     Cf.  Benj.  Sales,  §  202. 

BO  Cases  cited  in  note  48,  ante. 


12  ORUKKUS. 

|i;»rti('R.*'  I'lit  if  Miili  mill's  corrfsiuiiKl  with  one  aiHitlicr.  :iinl  ditTiT 
fumi  fhr  »'iiir\.  it  Imcoiius  ;i  (lucsiinii  of  f;i<  i  foi  tin*  jury  wlii'tlicr  tln-ir 
;irc(>pia!U('  liy  llic  itarlits  ((iiistilults  a  m-w  ((tiilrart,  as  <'\  idniccd  by 
llu'  notos.'-  {-)  If  tlicic  Ik*  IK)  signed  cmry.  the  iiolfs.  if  llicy  cor- 
rrspoiKl  Willi  one  an«»flnr  and  state  all  the  tfiins  of  llir  bargain. 
top'thor  constitute  a  nuMiioiaiidum  of  tlio  contract.'^  Iliil  if  (lny  do 
not  rorr(\«:itond.  or  aro  insiinicictu.  no  nionioiandnni  at  all  exists. "' 
(3)  Kither  note  by  itself  const iliitrs  a  inenioranduiii.  in  tlie  absence  of 
evidence  that  the  sijjm'd  entry  or  ilic  other  note  dilVers  ilieiefroin.''" 

Healestate  brokers,  however,  have  no  power  to  si^n  niemoranda 
which  will  bind  both  parties;^'  their  i)ower  to  si<:jn  au  aj^reenient 
wliich  shall  bind  even  the  principal  is  denied  in  some  cases,"^  though 
it  is  recognized,  and.  it  seems,  with  U'tter  reason,  in  otliers.''* 

Power  to  Delegate  Authnritfj. 

A  broker  employed  to  make  a  contract  for  his  principal  nnist  give 
the  business  his  personal  attention,  because  the  principal  is  presumed 
to  rely  on  his  exjieiieiice  and  discretion.  The  broker  must  not  dele- 
gate his  authority.^"  JJul  mcMi*  ministerial  acts  may  be  i)erformed  by 
a  subagent   or  clerk,   .such  as  signing  a  memorandum  of  siile,°°   or 

-■•»  The  notes  do  not  constitute  the  contract.  Thonitou  v.  Cliarlfs.  '.•  .Mees.  & 
W.  802.  per  Parke,  B.;  Heyman  v.  Nealc,  2  Camp.  ;i37,  per  Ix)id  Ellenborough; 
Slevewrigbt  v.  Archibald,  20  Law  J.  Q.  B.  529.  17  Q.  B.  116. 

62  Thornton  v.  Cliarle.s,  9  Mees.  &  W.  S02;   SievewriKht  v.  Ar<-liil>ald,  supra. 

Bs  Gooni  V.  Aflalo,  U  IJaru.  &  C.  117;    Slevewri^lht  v.  .Xrclilltalil.  supra. 

1*  Thornton  v.  Kempster,  "»  Taunt.  78<J;  Crant  v.  Fletcher.  ."»  Ham.  &  C.  AWCy. 
SievewriKht  v.  Archibald,  .supra. 

65  Hawes  v.  Konster,  1  Moody  &  K.  'M\H;  Tarton  v.  Cmfts.  ir.  C.  W.  iN.  S.»  11; 
Thompson  v.  (lanliiier,  1  C.  I*.  Div.  777. 

••'0  Morris  v.  Iluddy.  20  N.  J.  Va\.  2:?ti. 

^7  Glentworth  v.  Luther.  21  Barb.  (.\.  Y.)  14.".:  Hn:i.ii  v.  Cue.  1  !•:  1>.  .^niith 
(.\.  Y.)  17.'i;  Shepherd  v.  Iledden.  29  .\.  .1.  Law,  XW:  .Monis  v.  Kuddy.  20  N. 
J.  K<|  ZJ*'.;  O'Uellly  v.  Keiin  (N.  J.  Krr.  iV;.-  App.)  \'A  Atl.  ti)7:?;  Chapman  v. 
Jewett  rVa.)  24  S.  K.  201;    Halsey  v.  M.)nt.'lro.  !>2  Va.  .".si.  21  S.  K.  2r.s. 

ao  Kono  v.  Dutcher,  18  -N.  J.  Kq.  401;  Rutenberg  v.  .Main.  47  Cal.  21,*.:  I'riii 
gl«'  V.  SjiauldlnR.  53  Barb.  (N.  Y.)  17;  Ilaydock  v.  Stnw.  4o  N.  Y.  :w>:\.  i.verrul- 
liig  ("oleiiian  V.  C'arrlguoH.  IX  Barb.  (N.  Y.)  00. 

fif  Wllll.oiiH  \.  Woods,  1»;  -Md.  220;  Sims  v.  .M.iy,  19  Ihiii.  c.(i7.  1  N.  Y.  SuiH). 
«;71;  Allen  v.  McConlhe.  121  .N.  V.  .'.12.  2t;  N.  L.  S12;  Elwell  v.  Chamberlain, 
2  IU»KW.  (N.  Y.)  2:10. 

<io  \VUIlunw  V.  Woods,  H;  .Md    220. 


IMI'I.IKI)    I'OWKIJH    TO    imoKKKS. 


13 


Kclliii;;  Kfork  on  iIk'  inaikcl  when  the  ItioUcr  lias  dccidr-d  upon  ili<' 
advisaltililv  of  KcIIinj;.'"  So,  when  a  hrokcr  liana  piir(-haH«f  or  Hale  to 
niak*'  in  a  distant  «i(y,  he  may  niako  it  tliiouf^h  an  a^cnt  roHidont 
thci'c."-     When  a  lii(dv(r  has  wronj^fnlly  dHct^atfd  his  aulliorily,  tlio 

piincipal.  knowin;;  ol'  ilic  d<'h';4ati<tn,  cannot  retain  the  Ijent.'litw,  and 
deny  (he  jMiwer  of  tlie  snha^M'nt."" 

I*oir<'i'  to  Ktcinw  I'ai/iiimt. 

A  broker  has  ordinarily  no  implied  power  to  reeeivo  payment  f<ii- 
jj;oods  sold  by  him."*  In  a  New  York  case  evidence  was  refused  (jf  a 
local  usa«je  allow  in<ji:  brokers  to  receive  payment  for  jjrain  sold  by  them 
when  the  sellei'  resided  out  of  the  city."''  "When,  however,  a  broker  is 
intrusted  with  the  possession  of  the  j^oods  sold  by  him,  he  may  receive 
payment;  but  this  is  because,  by  having  possession,  the  Ijroker  be- 
comes a  factor,  and  clothed  with  the  powers  of  a  factor."®  For  this 
reason,  stock  brokers,  who,  as  has  been  seen,  are  in  reality  factors, 
may  receive  payment  for  stock  sold  and  delivered  by  them."^  A  real- 
estate  brok<'r  having  power  to  "sell  and  convey''  land  has  also  an  im 
jtli<'d  power  to  ivceive  payment  therefor.  "An  attorney  who  has 
l)ower  to  convey  has  so  essentially  the  power  to  receive  the  purchase 
money  that  a  voluntary  conveyance,  without  receiving  the  stipulated 
price  or  security  for  it,  would  be  fraudulent;  and  either  the  whole 
contract  mij^ht  be  rescinded  by  the  principal,  or  the  vendee  [be  held] 
liable  for  the  purchase  money."  "** 

01  Sims  v.  :May,  4"J  IIuu,  GU7,  1  N.  Y.  Supp.  G71;  Gregory  v.  Wondell.  40  Mith. 
432;    (ihoen  v.  Johnson,  90  Pa.  St.  .S8. 

«2  Allen  v.  McCoiiiho.  124  N.  Y.  ::4L',  20  N.  E.  812;  Rosenstock  v.  Tormey,  32 
Md.  loy. 

03  As  where  the  .subagent  mal«'s  false  representations.  Elwell  v.  Chamber- 
lain, 2  Bosw.  (X.  Y.)  2;50. 

04  IIi;rgiiis  V.  Moore,  34  N.  Y.  417;  Saladiii  v.  Mii-liell,  4."  111.  7'.>:  <;raliam  v. 
Duckwall,  s  Busli  (Ky.)  12;  Crosby  v.  IJill,  39  Oliio  St.  lUU.  And  see  Bassett 
v.  Lederer,  1  Hun  (N.  Y.)  274;   Gallup  v.  Letlerer,  Id.  2S2. 

«5  Higgins  V.  Moore,  34  N.  Y.  417. 
80  See  ante,  p.  2,  and  monograph  on  Factors,  2. 

0  7  Bid.  Stock  Brok.  91;    Young  v.  Cole,  4  Scott.  489;    Cropper  v.  Cook,  L.  11. 
3  C.  P.  194;   Mollett  v.  Kol)inson.  L.  R.  .">  C.  P.  tHtJ. 
08  I'eck  V.  Harriott,  U  Serg.  &;  R.  (Pa.)  145. 


1  1  nitOKKUS. 

/'otreT  to  /i,S('it)>7  or  S)i?niiif  f<>  Arhitmtiim. 

A  ItmUi'i-  li;is  no  iiii|ilirti  pnwcr  to  s.Mlc  disimtcs  f^rowinn  out  <»f 
coiitriuls  iiiJidr  li.v  liiiii  for  his  priueip.il  Ity  snlunilliii;;  tlio  dilTt -nines 
to  ;irl>iiiation; '"  nnd.  luiviii^'  \wm\v  a  coiiiratl.  tliu  brokiT  has  nu  iiu- 
plitnl  power  to  ressciiid  it.'" 

RIGHTS  AND  LIABILITIES  OF  BROKERS. 

5.  Tlie  rights  and  liabilities  of  brokers  will  be  considered 

under  the  followinj^  heads: 

(a)  Duty  to  observe  good  faith — Acting  for  both  parties. 
(\i)  Liability  for  negligence. 

(c)  Duty  to  follow  instructions. 

(d)  Dutj'  to  account. 

(e)  Right  to  commissions. 

(f )  Right  to  reimbursement  and  indemnity. 

(g)  Right  to  a  lien. 

(h;  Rights  against  and  liabilities  to  third  persons. 

SAME— GOOD  FAITH— ACTING  FOR  BOTH  PARTIES. 

6.  A  broker  is  required  to  observe  perfect  good  faith  in  his 

dealing  with  his  principal.     He  cannot  act  as  agent 

for  both  parties,  except — 
EXCEPTION— By    the    weight    of    authority,    a    broker 

may  act  for  both  parties 
(aj   When   he   introduces  a  named  person   or   sells  at  a 

fixed  price,  or 

(b)  When  both  parties  consent. 

A  broker,  hein;:  trusted   with  the  confideiico  of  liis  priiuipal.  is  in 
a  fiduciarv  rehilion  to  liim.  and  is  lioiiiid  to  exercise  tlie  iilinost  ;,'ood 
faith.       He  iiiiist  not  |iiit  liiniself  in  any  [)osiiion  which  makes  his  in 
terest  adverse  to  that   of  his  principal.       lie  cannot   ad   as  a^^ent    for 
.several  principals  whose  interestH  are  in  conllict.''      Nor  lan  a  hroker 

•  •  iDKriilunii  V.  WliitiuDn'.  7r»  111.  Ii4. 

T>  Snladiii  V.  Mllcli.ll.  ir.  111.  TJ»:    Kelly  v.  Milling  (^o..  WZ  V.a.  HT,.  IS  S.  K.  M):\. 

T»  Murruy  v.  lieard,  101!  N.  V.  OOo,  7  N.  E.  006. 


UKilirs     AM)     I  lAI'.M.iriKS    OK     mtoKKIC^.  l-') 

iiisliii(lt'<l  1«»  liny  or  sell  foi-  lii>  pririciicil  Immoimc  tlic  scll«i  <»r  jnif 
fhjiHer/"  niilrss  il  is  willi  lln-  Iviiow  Icd;^!'  ;iinl  coiisciil  of  iIk-  priiiri 
I»mI/'  Tn  siicli  ciisf  it  is  no  jiuswcr  ilmt  liis  iiilfuiion  \\;is  lioiifsl.  :iii<l 
tliat  llic  lnokci-  (lid  IxMlcr  fof  his  iniiiri|»jil  by  sflliii;:  liim  liis  own 
properly  than  lie  <()iihl  liasc  done  I»y  ;z"»i";;  into  Ihr  o|i(ii  ni.iiki'l.  Tin? 
nilr  is  iiilh'xilth',  and,  although  its  violation  in  a  parlicnlac  case  cansod 
no  daniaj^c  to  \ho  jtiincipal.  h«>  cannot  be  coniiicllcd  t<j  adopt  the  pur- 
chase.^* 
A.ct!ng  ^or  liofh  I'lul'uMi. 

Good  faith  to  his  principal  rcqniies  that  a  broker  shall  not  attempt 
to  act  as  aj^ent  for  the  otiicr  i»arly  also."  If  a  broker  so  actin^r  makes 
a  contract,  the  principals  are  not  bound  by  it.'"  When  an  a;;ent  is 
thus  employed  by  one  j»arty  to  sell,  and  i>y  the  other  to  inirchasc.  and  is 
vested  with  any  disciclion  or  jndjinient  in  the  ncjiotiation.  his  duties 
are  in  contlict,  and  he  caniMJt  fairly  serve  both  parties.      The  duty  of 

Ta  Bain  V.  Browu,  .■"»<»  N.  Y.  liS.j;  Tewksbury  v.  Spniance,  75  111.  187;  Hugbos 
V.  Washinjiton.  72  III.  84;  Ilolberg  v.  Nichol.  14!>  111.  249.  37  N.  E.  &3:  Stewart 
V.  .MatluT.  ;J2  Wis.  344;  Sbaruian  v.  Brandt.  L.  H.  C  Q.  B.  720;  Mollctt  v.  Kol>- 
insnii,  L.  II.  o  C.  I'.  (K»'r>.  A  broker  cannot  soil  to  a  linn  of  which  he  is  ;i  lucm- 
ber.  Francis  v.  Kcrkcr,  S.j  III.  190.  When  a  broker  is  authorized  to  sell  at  a 
certain  price,  and  is  to  receive  as  compensation  all  above  that  price,  it  would 
seem  that  he  niiijht  become  the  pnnliasei-  himself  at  the  price  fixed.  But  see 
Tower  v.  O'Ncil.  GG  Pa.  St.  X\1. 

"3  When  a  broker,  autliorized  to  sell,  by  a  subsequent  agreement  with  his 
principal  becomes  the  purchaser  himself,  he  is  entitled  to  hig  commissions  as 
though  he  had  sold  to  a  third  person.  Stewart  v.  Mather,  .32  Wis.  344;  Grant 
V.  Hardy,  a.'J  Wis.  G68.  This  is  true  even  if  he  has  been  guilty  of  a  fraud  on 
one  who  became  a  co-purchaser.    Hardy  v.  Stonebraker,  31  Wis.  G40. 

•*  Taussig  V.  Hart,  58  N.  Y.  425.  A  custom  for  a  broker  to  buy  of  or  sell  to 
himself,  unknown  to  the  employer,  is  against  public  policy,  and  illegal.  Farns- 
worth  V.  Ilemmer,  1  Allen  (Mass.)  494;   Com.  v.  Cooper.  1.3o  Mass.  285. 

-5  Bobbins  v.  Sears.  23  Fed.  874;  Rice  v.  Wood,  113  .Mass.  133;  Raisin  v. 
Clark,  41  Md.  1.58:  Meyer  v.  Ilanchett,  43  Wis.  24G.  And  see  Empire  State  Ins. 
Co.  V.  American  Cent.  Ins.  Co..  l.'iS  N.  Y.  446,  '^A  N.  E.  200.  A  real-estate 
agent  who  sells  the  lands,  for  more  than  the  price  fixed  by  the  terms  of  tiis 
contract,  to  another,  for  whom  he  is  also  agent  for  the  investment  of  money, 
and  secretly  retains  the  excess,  Is  liable  to  a  double  recovery  therefor  by  the 
aeller  and  purcha.««er.     Lewis  v.  Denisou,  2  App.  D.  C.  .387. 

•8  Taussig  V.  Hart,  58  N.  Y.  425.  For  the  right  of  a  broker,  acting  for  both 
parties,  to  commissions,  see  i)ost,  p.  24. 


IG  BROKERS. 

all  aj;t'iit  for  a  vendor  is  to  sell  ilic  iuojmiIv  al  iln-  hi^^licst  juice:  of 
thea^enl  of  (he  purchaser,  to  Itiiv  it  foi-  (he  lowest.  'I'hese  duties  aro 
so  utterly  irrecoucihilde  and  contlidin;^'  lliat  they  caiiutit  lie  |ieif<Miue(l 
by  the  same  iH*rson  without  j;reat  dandier  that  the  ri^^his  <»f  oih'  prin 
cipal  will  he  saeritU-('d  to  promote  the  inteiests  of  the  otlnr.  or  that 
neither  <»f  tliem  will  enjoy  tlu'  iM-nelit  of  a  discicet  and  faithful  exer- 
ciw  of  the  trust  reposed  in  the  auent.'^ 

Sili/tf-     /'..rr,j>f /(/>!■'<     MiiltllriiUin. 

In  some  of  the  cases  it  is  slated,  as  a  hioad  excejition  to  tlie  rule 
tliai  a  broker  cannot  act  for  both  parlies,  that  he  may  do  so  when  lie 
is  a  mere  middleman,  and  has  no  other  duties  to  perform  than  to  bring 
the  parties  to«;etlier  to  eonlrait  for  themselves.^*  l»ut  a  broker  does 
not  act  in  «;ood  faith  to  his  lirst  employer  if  he  turn  aside  all  proposals 
that  are  not  accompanied  with  an  a«lditional  retainer  or  commission. 
Vet  such  is  the  temjitation  upon  him  if  he  may  levy  a  fee  from  both 
I'arties.  When  he  has  secured  the  retainer  of  the  other  party,  he  is 
interested,  in  order  to  win  his  double  commissiou,  to  bring  together 
these  two,  to  the  exclusion  of  all  others.  The  interests  of  his  principal 
are  in  danger  of  prejudice  from  this  counter  interest  in  the  agent. 
And,  besides,  the  broker  is  ordinarily  and  almost  inevitably  intrusted, 
to  a  greater  or  less  extent,  with  the  confidence  of  his  principal.'" 

The  jiroper  limits  for  the  exception  to  the  general  rule  seem  to  be 
that  the  broker  may  act  for  both  jiarties  when  the  one  lirst  employ- 
ing him  merely  engages  him  to  establish  negotiations  between  the 
Itiiixipal  and  a  named  person;  and  in  such  case  there  is  no  reason  why 
the  broker  cannot  lawfully  receive  a  commission  from  the  latter.*" 
So,   when  a  broker  is  employed  to  buy  or  sell  at  a  tixed  price,  the 

11  I?:irry  v.  .Scliniltlt.  r>7  Wis.  17'J,  15  N.  W.  'J  J;  F.inisworth  v.  Ik'iunicr.  I 
.Mloii  (.Mjisb.)  4;»4. 

Th  Kuauiss  V.  HrewlnK  Co..  1-tU  N.  Y.  70.  :tc.  N.  E.  807;  Slcpel  v.  (lould.  7 
I.aus.  (N.  Y.)  177;  IImvIImiuI  v.  rricc.  C,  M1.k<'."  Ucp.  .•172,  '2W  N.  Y.  Sin>p.  757; 
I'.onwcll  V.  Aiild.  1>  .Misc.  Kcp.  <>.'».  lt>  .N".  Y.  Supp.  l.">:  Rnpp  v.  Snmpsoii.  1(1  Gray 
(.Mass.)  ;'.5»H;  Orton  v.  ScoHcJd.  CI  ^Vis.  :iSL'.  '1\  .\  \\  .  'JCl :  Il.riiian  v.  M.irllueau, 
1  Wis.  151. 

'9  Walker  V.  OsKood.  !»s  .Mass.  .'US;   .SnituitT  v.  ('nllar.  JO  .Mirh.  ^^~:^. 

"0  Sim-  Knausfl  v.  Unwlng  Co.,  Mli  -N.  Y.  70,  3G  N.  K.  >*'>~;  S<  iliiinr  v.  Collar, 
40  Mich.  375. 


KKilirs    AM)     IIAl'.IMTIKH    <»K    UltuKKIlS.  17 

l>roI<rr  In  iriiiiii  .iri.v  (lifrtTcucc.  Im-  iii:iv  l;i\vfiill.v  iwi  UK  a;:<-iit  for  tin? 
otlMT  piiilv  ;ils(»/'  Hut,  if  lie  <-(Hhc;i1s  his  ;i;;riir  y  from  tin-  l;ill«T.  tin; 
bnikci-  rjiiiiinl  I:i\\  fully  :i(l  ;is  his  ;i;;<'iit,  l»(M;iiisf  lie  h:is  :i  |»crsoii;iI 
inlrirsl  ill  SflMii^;  ;il  ;is  hi^ih.  oi"  liiiyin;,'  ;il  ;is  h>\v.  a  piic*-  as  [tossiltlc, 
and  (his  inlncsl  is  in  idiilliil  wilh  tiial  of  the  second  iiiimiijai."- 

Sitnii       l\if/i>s  (  'misfitti IK/. 

Whon  liolli  i»ailit's  know  of  th<'  (h)uldo  apency  of  a  broker,  and  con- 
sent lo  il,  he  \i(dalcs  no  duly  to  eilhor  luinciiial,  and  liis  miployment 
by  each  is  lepal."* '  Some  cases,  however,  bave  dec  hired  sndi  double 
a<:encies  to  be  ilb'^ial.  as  against  public  jtolicy."*  The  weight  of  au- 
ihcuity  and  the  better  reason  suppmt  the  le<;ality  of  sm-li  contracts, 
Tims,  it  was  said  in  an  Ohio  case:^^'  "We  admit  that  all  such  trans- 
actions slKUild  be  re^Mrded  with  suspicion;  lint,  where  full  knowledge 
and  consent  of  all  parti<'s  interested  ar<'  clearly  shown,  we  know  of 
no  public  policy  or  principle  of  sound  morality  whiili  can  be  said  to  bo 
violated.  It  seems  to  ns,  rather,  that  public  poliey  recinires  that  con- 
tracts fairly  entered  into  by  jtarties  comijetent  to  contract  should  be 
enforced  where  no  public  law  has  been  violated,  and  ikj  corrupt  purpose 
or  end  is  sou-;ht  to  be  accomplished.  True,  such  agent  may  not  be 
able  to  serve  each  of  his  principals  with  all  his  skill  and  ener^^y.  He 
may  not  be  able  to  obtain  for  his  vendor  principal  the  hij^hest  price 
which  could  be  obtained,  or  for  the  purchaser  the  lowest  i»rice  for 
which  it  could  be  purchased.  But  he  can  render  to  each  a  service 
entirely  free  from  falsehood  and  fraud, — a  fair  and  valuable  service,  in 
which  his  best  judji;ment  and  his  soundest  discretion  are  fully  and 
freely  exercised.  And  in  such  case  such  service  is  all  that  either  of 
his  principals  contracted  for.  Undoubtedly,  if  two  persons  «lesire  to 
negotiate  an  exchange  or  a  bargain  and  sale  of  property,  they  may 

81  Bany  v.  Schmidt,  57  Wis.  ITli.  15  N.  W.  24;    Montross  v.  E(M.v.  IM  Mi.  li 
100,  53  N.  W.  DIG;   Alexander  v.  University,  57  Ind.  AW. 
8  2  Evrrliait  V.  Searle.  71  Pa.  St.  25ij. 

83  Kowe  V.  Stevens.  53  N.  Y.  621;  Alexander  v.  University,  57  Ind.  4t;«;;  .I.is- 
lin  V.  Cowee,  50  N.  Y.  G26;  Adams  Min.  Co.  v.  Senter,  2<j  Mich.  73;  Fitzsim- 
nious  V.  Express  Co.,  40  Ga.  330;  United  States  liolling  Stock  Co.  v.  Atlantic 
&  G.  W.  K.  Co..  34  Ohio  St.  4.50;  Pugsley  v.  Murray,  4  E.  D.  Smith  (N.  Y.)  24.5. 
See,  also,  note  by  Bennett  to  Lynch  v.  Fallon,  16  Ara.  Law  Keg.  .'^.33;  Bell  v. 
McConnell.  37  Oliio  St.  31XJ;   Mauders  v.  Craft,  3  Colo.  App.  2^36.  32  Tao.  830. 

84  Raisin  v.  Clark.  41  Md.  158;   Meyer  v.  Hanchett,  43  Wis.  246. 
89  Bell  V.  McConnell.  37  Ohio  St.  396. 

BROKKRS — 2 


IS  BROKKRS. 

aurt'*'  \o  (l.l.-;:atc  to  a  iIiikI  jhisoii  iIh-  |ioufr  l(»  fix  Ihf  ffnus.  aiwl  no 
Mis|>i«ioii  of  a  viiilaliil  piiblir  polity  wtniltl  aiisc.  It  may  hv  sail! 
that  sufli  third  jhtsom  is  an  arbitrator  cliost'ii  t«)  sfllK'  dilTt'ivint's  he- 
twi't'ii  his  «'iiiph>vfis.  an  a«:«iMV  or  oIVkc  ;,M«'ally  favon'd  in  the  law. 
Ami  Si.  it  i>.  r.iit  wliat  is  thf  dist  imlioii  lM-t\v<'<'ii  tlial  employment 
and  tlir  one  in  the  pieseiit  ease,  which  >iioidd  laiisc  ilu-  hiw  lu  fav.ir 
the  former  aiul  aldior  tlu'  hitter?"  "" 

SAME -NEGLIGENCE. 

7.  A  broker  is  bound  to  possess  and  exercise  reasonable 
skill  and  diligence.  He  is  liable  to  his  principal  for 
losses  due  to  his  negligence. 

A  broker  holds  himself  out  as  possessed  of  ordinary  skill  in  the  bnsi 
iiess  in  which  he  is  en;j;a«,MHl:  and.  when  he  undertakes  ii  ne;:otiation, 
he  is  bound  to  conduct  it  with  reasonable  dilijicnce."^  If  be  does  this, 
he  is  not  liable  to  his  principal  for  negligence.'"*  A  money  broker,  to 
whom  money  is  intrusted  to  loan,  is  liable  if.  by  his  want  of  care  in 
estimatinj;  the  value  of  the  land  on  which  a  mortgage  is  taken  as  se 
curity,  his  principal  sutTers  a  loss.**"  S(.  if  he  fiuls  to  record  the  mort- 
gage, when  that  is  jtai  t  of  his  duty.'^  A  broker  who,  without  suf- 
ticient  information,  advises  his  jirim  i|.al  to  make  a  sale,  will  be  held 
re.sponsible  if  the  sale  causes  a  h»ss.'^     IJut  an  insurance  broker  who 

«•  Bell  V.  McCotinell,  ."tT  Ohio  St.  :;Im;,  401. 

»i  SbipbiTd  V.  Field.  70  111.  4;J8:  McFarlnud  v.  .M»("l.'os  (Pa.  Sup.)  5  .\tl.  r^>: 
I'.aruard  v.  Coffin,  138  Mas.^.  37;    Stewart  v.  Muse.  02  Ind.  385. 

»><•  (JlHH'U  V.  Jobnson.  SX»  Pa.  St.  38;  Gettius  v.  Scudder,  71  111.  SO;  .Matilu-ws 
V.  ruller.  rSi  Mass.  441;.  Wlifu  property  I.'*  placed  wlUi  a  broker  for  sale,  be  is 
uol  iKjuud  to  eouHunuiiate  a  sale,  or  prwure  a  purcliaser  upon  tb.-  au're.Ml  terms. 
\Val«b  V.  Hastings.  'JO  Colo.  •J43.  38  Pae.  3_'4. 

^w  .McFarland  v.  MeCleeH  (Pa.  Sup.)  r>  Atl.  .'"m);  Sliiplierd  v.  Field.  70  111.  43S. 
Wiiere  defendant,  a  stock  broker,  took  eertlUcates  of  stock  as  collateral  security 
f  ,r  a  loan  be  was  autiiori/.ed  to  n»al;e  for  a  client,  witbout  lnquirin«  as  to  their 
validity  at  the  office  of  the  coriM.ration,  which  was  aece.^^siltb-  to  him.  or  taking 
..ilier  precautious,  and  the  certillcates  proved  to  be  forgeries,  defendaut  was 
Kullty  of  8U<  h  nek'liKence  as  lo  render  him  liable  for  the  loss.  Isliuui  v.  Post. 
71  II un,  IHl.  'S:  N.  Y.  Sn|»|'.  211.  lUW;    Post  v.  I  sham,  Id. 

•  »  Stewart  v.  .Muse.  02  Ind.  .'W-'i. 

•  I  Barnard  v.  <Joffin,  138  Mass.  37. 


KK.ins     AM)     I.IAIMMTIKS    OK    IMM  »K  Kll!«.  1  •♦ 

tiikt'S  (»ii(  |nilirics  fill'  his  |iiiiiii|i:i I  in  »M)iiip;ini<-s  rc|iiilc(i  solvciil  at 
tlial  time  is  not  liaMr  if  iIhv  siilist(|ni'n(ly  fail."'  And  a  Hlock  bndicr 
has  brcii  held  not  to  he  liahlc  I'oi"  maiiiirw  lost  wlii<li  Im-  liad  d<*|»osilcd 
with  anothci-  hiokcr.  acrordiiij;  to  the  nsa^^c  of  the  "I'.oaid  of  KroUcrs." 
niu\  had  not  icipiiifd  scmrily  t  hnrror.'' ■  A  hrokcT  exercising  n-a- 
Honalih-  rai<'  in  niakin;^  invcstnu-nls  is  iM)t  liahk  foi'  a  Kulisiiiucut 
dt'itirtiai  ion  in  the  stocks  lioni^ht."* 

SAME— FOLLOWING  INSTRUCTIONS. 

8.  A  broker  is  bound  to  follow  the  instructions  given  him 
by  his  principal,  and  is  liable  for  all  losses  resulting 
from  his  failure  to  do  so. 

A  broker  must  conlorni  to  the  instructions  given  him  by  his  princi- 
pal.""' Jf  he  exceeds  ids  instructions,  contracts  made  by  him  foi'  the 
principal  do  not  bind  the  latter.""  By  failin^^  to  follow  instructions, 
the  broker  becomes  liable  to  the  jirincipal  for  any  losses  resulting:  from 
the  breach  of  duty.'''     Tnder  an  order  to  buy  stock  "on  GO  days"  buy- 

»2  tU'tiiiis  V.  S<iitl(l(M'.  71  111.  SG. 

»3  (Jlic.ii  V.  Joliustiii.  !K)  Pa.  St.  38. 

9*  Matthews  v.  Fuller.  123  Mass.  446. 

ST.  rickeriiig  v.  Douierrltt,  100  Mass.  416;  White  v.  Smith.  54  N.  Y.  r>22. 
Authority  to  a  real-estate  agent  to  contract  for  a  sale  will  not  authorize  him  to 
make  a  contract  for  the  sale  of  an  option  to  purchase.  Jones  v.  HoUaday,  2 
App.  D.  C.  27'.».  After  preliminary  corri'spoiHleiice.  a  real-estate  broker  wrote 
to  defendant,  stating  that  he  could  seU  defendant's  land  (800  acres)  for  i^t.fKX), 
one-half  cash,  balance  in  one  and  two  years  at  8  per  cent.  Interest.  Defendant 
telegraphed,  "Accept  the  $4,CK»0  proposition."  Held  not  to  authorize  the  broker 
to  contract  to  sell  for  cash.  Kverman  v.  Herndon,  71  Miss.  823,  15  South.  l.'5r». 
A  usage  of  brokers  will  iidt  justify  a  breach  of  instructions.  Parsons  v.  Martin. 
11  (Jray  iMass.)  Ill;    Day  v.  Holmes,  103  Mass.  306. 

»«  Morris  v.  Ruddy,  20  N.  J.  Eq.  236.  A  sale  on  terms  more  advantageous 
tli;in  tlidse  ordered  by  the  principal  will  not  bind  him,  unless  he  ratifies  the  sale. 
Ne.sbitt  V.  Helser,  49  Mo.  38:3. 

»"  Laverty  v.  Snethen.  OS  N.  Y.  522;  Gray  v.  Murray,  3  Johns.  Ch.  (N.  Y.) 
107;  Schmertz  v.  Dwyer.  53  Pa.  St.  335.  Where  grain  brokers  employed  by  a 
dealer  to  buy  and  sell  wheat  for  future  delivery  write  the  dealer  that  a  contract 
which  he  has  for  May  can  be  changed  to  June  delivery,  to  which  letter  the  dealer 
makes  no  reply,  thougli  he  is  in  a  position  to  do  so.  and  the  brokers  then  change 
the  contract,  the  fact  tliat  the  dealer  receives  and  retains  a  statement  sent  him 


'20  BROKERS. 

»'r'«  option."'  :i  brnkrr  cMiuiot  Inn  llic  simk  liiiiiM-If.  ;iii»l  Iml.l  ii  mi  his 
priiK-ijmrs  jirciumi  for  f.O  days.""  Ih  disolirv  in;;  inslrudions,  a  bmUiT 
may  lose  his  lirn  un  nmncy  or  propiTty  in  liis  hands."* 

SAME— DUTY  TO   ACCOUNT. 

9.  A  broker  is   bound  to   render  his  principal   an   account 

of  all  business  transacted  on  his  behalf,  and  pay  over 
any  balance  due  the  principal. 

Tlio  duly  of  a  broker  in  kccpin;;  and  rcndcrinpj  acmunts  to  hi.s 
print  ipal  is  practically  tho  sanic  as  thai  of  a  factor.^""  He  must  keep 
accurate  record  of  all  his  Iransutions.  and  render  statements  thereof 
on  the  demand  of  the  principal.  The  bioker  must  i»ay  over  to  the 
principal  any  balance  remaining  due  him.^°^ 

SAME— RIGHT  TO  COMMISSIONS. 

10.  A  broker  is  entitled  to  commissions  for  the  service  he 

performs.     This  right  will  be  considered  under  the 
following  heads: 

(a)  Employment  necessary. 

(b)  Amount  of  commission. 
(  c)  Acting  for  both  parties, 
(d)  Illegal  contracts. 

(6)  What  is  performance  by  broker. 

(f )  Performance  within  time  given. 

(g)  Sale  completed  by  principal — Broker  procuring  cause, 
(h)  Sale  prevented  by  principal. 

(  i )  Exclusive  agency— More  than  one  broker  employed. 
( j  ;  Effect  of  requiring  a  license. 

tiy  tin-  liroktT.  Kliowlng  such  «h:iiiK<'.  (loos  not  sliow  a  nillflcnflim  nf  the  liroker's 
act  In  making  the  changi-.     Hjuiscm  v.  Hoyd,  101  U.  S.  .'mT.  ic,  .Snp.  ("t.  ."".Tl. 
•  <«  rickcrlng  V.  I»«'nH'rritt.  1(K>  .Mjiss.  41(5.     .\iid  see  Dny  v.  lloUni-s,  103  .Mass. 

»•  Jones  V.  MnrkH.  40  III.  .ll.'l. 

100  Hc«'  inonogruph  on  KactorH.  p.  1!>. 

«o»  IliiiiM  V.  Imiiion,  [)  luwji,  r».s'J;   Nuulsc  v.  rrlnif,  7  .1  dins.  ("li.  iN.  Y.)  09. 


nil. Ills    AM>    I.IAIill.lTIK.S    OF    IJHoKKUS.  21 

Einploijin mf  Xrct  ssi 1 1 'ij . 

A  broker  is  ml  it  led  lo  coiiipciisiif  ion  in  some  form  for  tlie  sfrviccK 
pcifoiMicd  Cor  his  |tiiiiri|i;il.  Hiil.  Im-Ioic  a  broker  can  recover  any 
form  of  comjiensalioii.  in-  miisi  sln»\\  empIoviiieMl  ;  that  is.  lie  must 
eslablish  the  exisleiiee  of  llie  rehilioii  ni'  |irim-i|i,il  iiiid  liroker.'"-      I'<i 

10-  CaiiiplifJl  I'riiiliiit.'  rri'.-.s  A;  .Maiiiir;ictiiiing  Co.  V.  Yoiivston,  11  Misc.  Itcji. 
340,  '^'2  N.  Y.  Siipp.  LMh!;  Dv  .Mars  v.  liocliiu,  G  -Misc.  I{c|>-  ''^,  20  N.  Y.  Siipji. 
67;  Cook  V.  Welch,  9  AHcu  (.Mass.)  '.iTti);  ('uinniings  v.  Town  of  Lake  Realty 
Co.,  80  Wis.  :'.Sli,  57  N.  W.  VA;  Hinds  v.  Henry.  30  N.  J.  Law,  328;  Atwater 
V.  Lockwodd.  :\U  ('(inii.  4.".;  .Mesttui  v.  Da  vies  (Tax.  Civ.  App.)  3G  S.  W.  SOTf. 
Waltou  V.  ("lark,  .".4  Mian.  341,  no  .\.  W.  40.  Kut  see,  for  facts  held  to  show 
^'aipliiynieut.  Iloldeu  v.  Starks,  150  M.-iss.  o<J3,  I'A  N.  E.  100!>;  lias.sett  v.  Uo«ers, 
102  .Mass.  47.  .'57  X.  K.  77L'.  The  one  contracting  to  pay  the  commission  need 
not  bo  the  lieiit  liiial  owner  of  llie  property  to  be  sold.  Jones  v.  Adler.  34  Md. 
440.  And  see  LaiKlsl.eryer  v.  Murray.  6  .Misc.  Rep.  00r>,  2.">  N.  Y.  Supp.  UK)7; 
Bowles  V.  Allen  (Va.)  L'l  S.  E.  (iO.">.  To  recover  commissions  from  a  corporation. 
a  broker  must  i)rove  einploynu  iil  by  some  one  having  power  to  bind  the  cor- 
poration. Tw(>lfth  St.  Market  Co.  v.  Jackson,  102  Pa.  St.  209.  A  wife  has  no 
power  to  bind  her  husband  to  pay  a  broker  commissions.  Harper  v.  Goodall,  62 
How.  Trac.  (N.  \'.)  288.  Where  a  broker  employed  to  sell  defendant's  farm 
on  commission  produces  a  purchaser,  who  takes  the  property  at  a  price  lixed  by 
■defendant,  the  latter  cannot  withhold  the  commission  on  the  ground  that  when 
the  contract  of  employment  was  made  the  broker  had.  unknown  to  defendant, 
already  found  the  customer,  and  was  employed  by  him  to  buy  a  farm,  but  from 
whom  he  was  to  receive  no  commission.  Donohue  v.  I'adden,  9.''.  Wis.  2<>,  00 
N.  W.  804.  Whore  a  broker  asks  and  obtains  from  the  owner  of  land  the  price 
at  which  he  is  willing  to  sell  it,  this,  of  itself,  does  not  establish  the  relation 
of  principal  and  agent  between  the  owner  and  the  broker.  Castner  v.  Richard- 
son, IS  Colo.  490.  :v.\  rac.  103.  Mere  consent  by  a  person  to  tlie  renderin;;  by  a 
real-estate  agent  of  the  unsolicited  services,  which  enable  him  to  sell  his  land, 
does  not  entitle  tlie  agent  to  recover  compensation  therefor  under  an  implied 
promise  of  remuneration.  Viley  v,  Pettit.  90  Ky.  576,  29  S.  W.  438.  Defendant, 
in  a  conversation  with  plaintilT,  whom  he  knew  to  be  a  real-estate  broker,  but 
whose  services  in  selling  the  proixrty  in  question  he  had  previously  dtnlined. 
told  plaintiff  that  he  would  take  .>f;:W.fKtO  for  the  property.  Plaintiff  asked  him 
If  he  was  in  earnest,  and  defendant  .said  that  he  meant  business,  and  that,  if 
plaintiff  did  not  think  so.'' let  him  bring  a  purchaser.  Held,  that  the  language 
did  not  constitute  an  offer  to  pay  plaintiff  a  commission  for  procuring  a  pur- 
chaser at  the  price  stated.  Dunn  v.  Price.  87  Te.x.  318.  28  S.  W.  (;81.  A  real- 
estate  broker  employed  to  sell  land,  who  agrees  to  pay  another  broker  a  com- 
mission if  he  procures  a  purchaser  therefor,  is  liable  for  the  commission  if  the 
purchaser  is  procured,  thougli  he  afterwards  discovers  that  the  land  is  not  the 
property  of  his  primipal.     Rarthell  v.  I'oter,  88  Wis.  310,  00  N.  W.  42".t.     Where 


'22  UHDKICIIS. 

formin*;  services  ns  n  inon>  voliiiif»'<  r.  fmiii  \\  lii.  li  tin'  princlpnl  derives 
;i  ln'iu'lil.  tines  iKtl  eiiiillf  the  liKiktr  to  t  (»m|nMs;it  inn ;  as.  where  a 
lirnker,  \\itliniu  a  previous  emplnx  meiit.  semis  to  the  nwiur  of  pi-np«'ity 
a  person  to  \\  lioni  he  sells  it.  the  broker  acqiiiies  no  ri;:lil  lo  a  conimis- 
sion  from  tlu'  veiulor.'"  In  some  eases  it  is  saiil.  howevei-.  that  a 
Itroker  is  entitled  lo  i-oniniissions  if  the  prinripal  adopts  iml  laiities 
his  acts.'*** 

.[iiiniiiit  iif  Coiumisshm. 

A  ludker's  ronii>onsation  is  nearly  always  jtaid  in  the  form  of  a  com- 
mission.''** Tliis  is  usually  a  percentage  t»n  the  amount  involved  in 
the  lrans;ietion  in  which  the  broker  is  employed;'*"'  but  it  may  bo  u 

.1  liroktT  fUU'Io.viHl  to  sell  wiiisky  iiiinnluci-il  a  pimliMser,  to  whom  the  principal 
gave  an  option  on  goods  made  antl  to  Ito  nindo  the  next  .vcnr.  tin-  hrokcr  was 
held  not  entitled  to  commissions  on  whisky  sold  under  the  option,  hiit  of  the 
next  seasons  manufacture.     IMock  v.  Walker.  It)  ('.  C.  A.  Or».  72  Fed.  (U'.u. 

103  Cook  V.  Welch.  S>  Allen  (Mas.s.)  ."{.".O:  Castner  v.  Hichanlson.  18  Colo.  VM\, 
.13  Pac.  UW:  Atwater  v.  Lockwood,  3J>  Conn.  45.  And  s.e  i:ilis  v.  Dunsworth. 
40  HI.  App.  1S7. 

104  Low  V.  Uailroad  Co..  40  X.  H.  2S4;  Twelfth  St.  Market  Co.  v.  .lack<on. 
I(t2  I'a.  St.  I2<nt:  Keys  v.  Johnson,  08  Pa.  St.  42.  Cf.  Maze  v.  Cordon.  0«5  Cal, 
01.  ;k>  Pac.  U02.  A  departure  of  a  real-estate  agent  from  the  terms  of  his 
authority  in  etTecting  a  sale  becomes,  on  ratification  by  the  principal,  a  jiart  of 
tlie  original  contract  of  employment,  and  the  compensation  fixed  therein  controls. 
Celatt  V.  Kidge.  117  Mo.  .'..>{.  2^?  S.  W.  S.S2.  The  fad  that  in  the  sale  of  land 
the  vindor  and  vendee  agree  that  the  latter  shall  pay  tlie  commissions  agreed 
upon  between  the  vendor  and  plaintiff  for  the  services  of  the  latter  in  negotiat- 
ing the  sale  does  not  relieve  the  vendor  of  liability  to  plalntllT.  In  the  absence  of 
an  agreement  on  plaintitTs  i)art  to  release  tlie  veutlor.  Burnett  v.  Casteel  (Tex. 
Clv.  App.)  :'.0  S.  W.  7S2. 

108  Whether  one  who  Is  pai<l  a  salary  e.ni  he  a  l»rok.r.  see  ante.  p.  'J. 

io«  An  agent  for  the  sale  of  land,  who  makes  a  s.ile  payable  In  installments, 
is  entitle*!  to  conunission  on  the  installments  .is  paid,  and  n.it  to  his  entire  «-om- 
niisslon  out  of  the  lirst  installment  paid.  .Nb-lvin  v.  .Mdridge.  si  Md.  (kiO,  32 
.Ml.  .'{«».  (Jresham  v.  (Jalvesion  Co.  (Tex.  Civ.  .\pp.)  'M  S.  W.  7!M).  Wliere  a 
broker  who  sold  certain  property  for  a  re<eiver  was  entitled  to  have  only  a 
pro|»ort lunate  part  of  his  ccunml.ssion  out  of  the  sum  jTild  down.  aMd  was  to  par- 
ticipate at  the  same  rate  in  the  deferred  iiaymeiits.  but  the  imrcliaser  made  tle- 
fatilt  In  the  (leferred  payments,  ami  the  pmperty  was  sold  under  a  trust  deed 
wcurlng  the  unpaid  pur«ha.se  price.  an«l  was  bid  in  by  another  for  a  nominal 
sum.  t»ut  the  punhaM-r.  ptusuant  to  a  gnaianty  he  had  m.ide  to  ilie  receiver, 
pal«l  a  nuK'h  larger  sum,  the  broker  Is  (-ntitleil  to  his  conunission  on  said  larger 
sum.     Peters  v.  Anderson  (Na.)  2.5  S.  K.  7.".4. 


ItlOHTS    AND    I.IAHnJTIKS    OK    HHOKKIW.  23 

(Irfiiiifr  SIMM.  iii(lrp«iMl<lil  <>f  ilic  jiiirc  iccciv  cd  liy  lln'  Nciidor,  or  the 
l>r(»k(i-  for  llic  sah'  of  proiniiv  iiiav  lie  ^jivcn  all  lie  icrcivcs  ov«'r  ;i 
fixid  pi'icf*.'"^  'I'lic  aiiioiiiit  of  a  luokcr's  commission  \h  (lf*fcrmiru*<l 
bv  I  he  express  com  i  a*  I  of  the  parties,  by  u«ik«%  or.  in  the  absence  of 
either  contiact  or  iisajje,  by  the  reasonable  value  of  the  services  per- 
formed.""^ A  u.sa^c.  however,  to  i\\  the  rate  of  comijensation.  irnisf 
be  established,  known,  and  dehuite.'"" 

AcdiKf  for  Jiof/i  I*(ir/ies, 

It  has  already  been  seen  that  in  most  cases  a  broker  cannot  act  as 
apent  for  both  parties.  The  exceptions  to  that  {general  nile  have  also 
been  stated.""     When  the  circ  iimstances  are  snch  thai  the  double  em- 

»«"  A  n-al-pstatc  nRt-iit  employed  to  .soil  land  for  a  certain  price  Is  not  entitled 
to  any  excess,  over  such  price,  he  may  obtain  for  the  land.  Snow  v.  Macfarlane, 
51  111.  App.  44S.     Ami  soo  ITiiraphreys  v.  IIoBe  (Va.)  25  S.  E.  lOG. 

108  Carrutbors  v.  Towiic,  SC  Iowa,  318,  o.'i  N.  W.  240.  That  a  real-estate 
broker  may  recover  compensation  for  the  value  of  his  services  when  no  sale  has 
resulted,  see  Hawkins  v.  Chandler,  S  Iloust.  (Del.)  434,  32  AU.  464. 

100  Totts  V.  Aechternacht,  93  I'a.  St.  138;  Desbler  v.  Beers,  32  III.  368;  Mor- 
gan V.  Mason.  4  E.  D.  Smith  (N.  Y.)  <>{0;  Erben  v.  Lorillard.  •41  X.  Y.  567; 
Thomas  v.  Brandt  (Md.)  2l>  Ail.  7t2A.  lu  an  action  on  a  quantum  meruit  to  re- 
cover compensation  for  elTecting  a  sale  of  real  estate,  plaintiff  not  being  a  regu- 
lar real-estate  agent,  proof  of  the  customary  charges  of  such  agents  for  similar 
services  is  not  conclusive.     Kennerly  v.  Sommerville,  2  Mo.  App.  Rep'r,  918. 

110  Ante.  p.  16.  An  agreement  by  real-estate  agents  to  divide  their  commia- 
sions  with  the  purchaser  of  land,  made  without  the  knowledge  of  their  principal, 
does  not  affect  their  right  to  recover  the  commissions  which  such  principal 
agreed  to  j)ay.  Scott  v.  Lloyd.  19  Colo.  401,  35  Pac  733.  The  mere  fact  that 
an  agent  employed  to  tiud  a  purchaser  for  land  advanced  to  the  purchaser  money 
to  make  a  part  payment  does  not  prevent  a  recovery  of  his  commission  from  the 
vendor.  Lawson  v.  Thompson,  10  Utah,  462.  37  Pac.  732.  Where  a  broker's 
contract  to  procure  a  purchaser  at  a  specified  price  simply  requires  him  to  bring 
his  principal  and  the  purchaser  together,  so  that  they  them.selves  can  make  their 
own  contract,  he  may  recover  commissions  from  both  parties  on  separate  con- 
tracts with  each.  Childs  v.  Ptomey,  17  Mont.  502,  43  Pac.  714.  A  real-estate 
agent,  eniitloycd  tci  buy  certain  property  at  a  certain  price,  does  not  forfeit  the 
commission  which  the  purchaser  agreed  to  pay  him  because  he  secured  another 
commission  from  the  vendor  after  the  vendor  had  accepted  the  terms  offered. 
Jones  V.  Henry,  IQ  Misc.  Rep.  IHl,  36  N.  Y.  Supp.  483.  \Miere  a  broker  is 
employed  to  sell  at  a  specified  price,  he  does  not,  by  accepting  a  commission 
from  the  purchaser,  lose  his  right  to  commissions  from  the  vendor.  Alex.-mder 
V.  University,  57  lud.  466;  Barry  v.  Schmidt,  57  Wis.  172,  15  N.  W.  24.     It  has 


L>1  BROKKKS. 

plnvimut  is  Ic^al.  llif  lirokcr  u\a\  n'lovcr  ((HninisslonR  from  Itoth 
|.;irii«'s;  "•  (.tlu'rwi.M'.  lie  may  U.hc  liis  ri};lit  to  a  commission  from 
filluT."-'  WIh'Ii  a  broker  has  Imm'M  cmiilovcd  to  perform  cerlain  du 
ties  under  promise  of  a  miiimissioii.  ami  he  attempts  to  aet  as  aj^ent 
for  the  other  jiarlv  also,  for  an  addilioiKil  commission,  h.v  eii;:a;j:in;; 
Willi  the  siMoiid  he  fttifeits  his  ri;.'hl  to  rompeiisatioii  Iroiii  the  one 
who  tii-st  employed  him."'  Uy  the  second  en;:aj,'emenl .  tin-  ;i^enl,  if 
In- does  not  in  fact  dis.ihle  hinisell'  fium  rend,  i  in;:  to  tin-  lirsl  employer 
the  full  (pianimn  of  service  conlra<led  for.  at  least  temjils  himself  not 
to  do  so.  And,  f<u-  the  same  reason,  he  cannot  recover  from  the  second 
emph»yer.  who  is  i^Mioranl  of  the  lirsl  enuaj^enient."*  And.  if  the  sec- 
ond employer  has  knowledj^e  of  the  lirsl  en^Mj^M'mont.  then  both  he 
and  the  a^ent  are  fjuilty  of  the  wron^'  committed  a;iainst  the  lirst  em- 
ployer, and  the  law  will  not  enforce  an  executory  contract  tMitenMl  into 
in  fraud  of  the  rights  of  the  lirsl  emiihiyer.  It  is  no  answer  to  say 
that  the  second  employer,  havin^j:  knowledj^e  of  the  lirst  emiiloyment, 
should  he  hehl  liable  on  his  promise,  because  he  could  not  be  defrauded 
in  the  transaction.      The  contract  itself  is  void  as  a^'ainst  public  policy 

iM'fii  licld  in  .some  cases  tlial  knuwleclp'  ami  coiisciit  of  both  parties  to  a  broker's 
doul)ie  a^rency  would  not  entitle  liim  to  eoniniissious  from  liotli.  Kaisin  v.  Clark, 
41  Md.  l.".S:   Lyudi  v.  Fallon.  11  IJ.  I.  ."'.11. 

iM  rincli  v.  Comrade's  Kx'r,  1.'4  I'm.  Si.  :;jf;.  lic  .Vtl.  :{US;  H.-ll  v.  .McConuell, 
:{7  Ohio  St.  :'.!m;;  McDonald  v.  .M.ilt/.  '.M  .Mi<h.  1712.  r>:t  N.  \V.  10.->S;  llorman  v. 
.Martlut'aii.  1  Wis.  ir.l;  Howe  v.  Sicvcii-.  .".:'.  N.  V.  f.'-M  :  Sicp'l  v.  Could.  7  b.in.s. 
(.\.  V.)  177;  Lansing  v.  Bliss.  .SU  lliiii.  L'o."..  .'.::  N.  V.  Sii])]..  .'•.lo:  Siiiiiii  v.  Tripi.s. 
li  Tex.  Civ.  Apii.  liiM.  21  S.  W.  7li'J:  Siicrwiii  v.  o'Coinmr.  L't  NCli.  Co.",.  :',<>  N. 
W.  »;20:    Campbell  v.  Haxicr.  41  Neb.  7-_'^t.  uo  N.  W.  5M>. 

iizUice  v.  Wo«h1,  lU  .Mass.  Ka;  Y<.uiiy  v.  'rraiiutr.  1.">M  111.  A2S.  41.'  N.  K. 
VHi;  Fuller  Watchman's  Kle«trical  Detector  Co.  v.  Louis.  50  III.  Ai)p.  4*28; 
Perkin.s  v.  (^ujirry  Co..  11  Misc.  Uep.  328,  'A2  N.  V.  Snpp.  '.•.to:  StrawhrldKe  v. 
Swan,  4;{  .Neb.  7.S1.  lil'  .N.  W.  r.t'.».  Ueal-est:itc  M^enls  represi-nting  the  dIfTcrent 
owners  In  an  i-xchanp-  of  lands  lose  the  rl^Mil  to  cDnimi.ssions  by  their  entering 
Into  an  agreement,  without  the  ettnsent  of  their  prineip.ils,  lo  piol  or  divide 
their  r<»mmIssions.     Norman  v.  HoHeniiin.  .".'.»  .Mo.  .\pp.  t..s*J. 

M3  Walker  v.  Osgood,  IIS  .Mas.s.  :i|S:  Pell  v.  .McCounell,  ;!7  Oliio  St.  :«M5; 
■linsley  v.  reiuiim.in.  1'J  Tex.  Civ.  App.  .'".•1.  .'.l  S.  W.  ."ttl.-.. 

Hi  Meyer  v.  lijinchett,  .'«>  Wis.  4P.t;  Hell  v.  .McCoiuiell.  ;t7  Ohio  St.  ."/.h;.  A 
UHage  of  brokerK  to  charge  a  commission  to  botli  pjirlies  to  an  exch.inge  of  i)rip- 
erty  will  not  be  enforced.  Haisin  v.  Cl.irk.  41  .Md.  \:>S:  Farnsworth  v.  Ilemmer, 
1  Allen  (.Ma.^s.j  4l>4.     But  see  Mullen  v.  Keeizleb,  7  Bush  tKy.>  2:>.i. 


UKillTS    AM)    I.IAIUI.ITIKH    OK    UltOKERS.  25 

jiiid  <^(hh\  moi-ils,  and,  liotli  |Milii's  IIkmtIo  Ixiii;.'   in  pari  <I<-li(!to,  the 
law   will  Iravc  lliciii  as  it  liiids  IIhmi."''' 

///.</(//  (nntriKls. 

It  has  alivad.v  been  seen  that  corlain  classes  of  contracts,  entered 
into  throu^jh  the  agency  of  brokers,  are  illej^iU.""  The  queHtion  is 
now  as  to  tlie  etTect  of  sudi  ille;,'alit>'  on  Hk-  lnoker's  ri^jht  to  compen- 
sation. A  broker  ini}j:ht  nej^oliate  such  a  contract  without  l)eiim  privy 
to  the  illejj:al  intent  of  the  piincipal  parties  to  it,  which  renders  it  void, 
and  in  such  a  case,  beiu^^  inuoceiii  of  any  violation  of  law,  and  not 
.suinj;  to  enforce  an  uidawful  contract,  has  a  meritorious  ground  for 
the  recovery  of  conijx'nsiition  for  services  and  advances.^''  Hut  when 
the  broker  is  privy  to  the  unlawful  design  of  the  parties,  and  brings 
them  together  for  the  very  purpose  of  entering  into  an  illegal  agree- 
ment, he  is  particeps  crimiuis,  and  cannot  recover  for  services  rendered 
or  losses  incurred  by  himself  on  behalf  of  either  in  forwarding  the 
transaction.'** 

115  Faruswortb  v.  Ilouuner.  1  Allen  (Mass.)  494;  Walker  v.  Osgood,  98  Mass. 
^8;  Smith  v.  Towiisond,  109  Mass.  500;  Rice  v.  Wood,  113  Mass.  133;  Boll- 
iiiau  V.  Loomis,  41  Coqu.  581;  Eveibart  v.  Searle,  71  Pa.  St.  256;  Morlson  v. 
Tbomp.sou.  L.  R.  9  Q.  B.  480;  Bell  v.  McConnell,  37  Ohio  St.  390;  Lynch  v. 
Fallon,  11  R.  I.  311. 

118  Ante,  p.  4. 

iiT  Irwin  v.  Williar,  110  U.  S.  499.  4  Sup.  Ct.  IGO;  Crawford  v.  Spencer,  92 
Mo.  498,  4  S.  W.  713;  Bartlett  v.  Smith,  13  Fed.  263;  Kirkpatrick  v.  Adams, 
20  Fed.  287;  First  Nat.  Bank  v.  Oskaloosa  Packing  Co.,  66  Iowa,  41,  23  N.  W. 
255.  The  fact  tliat  an  agreement  for  the  sale  of  land  to  a  purchaser  procured 
by  plaintiff  was  made  on  Sunday  does  not  affect  plaintiff's  rijxlit  of  action  on  a 
prior  agreement  to  pay  him  for  securing  a  purchaser.  Bolaud  v.  Kistle,  92  Iowa, 
309,  60  N.  W.  632.  It  has  been  held  that  a  broker  who  merely  brings  parties 
together,  and  they  make  and  carry  out  an  illegal  contract,  can  recover  the  agreed 
commission,  even  though  he  knew  of  his  principal's  illegal  object.  Ormes  v. 
Dauchy,  45  N.  Y.  Super.  Ct.  85.  For  a  more  strinjrcnt  rule,  see  In  re  Green. 
7  Biss.  338,  Fed.  Cas.  No.  5,751;  Barnard  v.  Backliaus,  52  Wis.  593.  6  N.  W. 
252.  In  some  cases,  notably  In  Pennsylvania  and  New  Jersey,  the  illegality  of 
the  transaction  Is  held  to  make  the  broker  a  principal,  and  to  prevent  his  re- 
covery of  commissions  or  advances.  Dickson's  Ex'r  v.  Tliomas.  97  Pa.  St.  278; 
Rnchizky  v.  De  Haven,  hi.  202;  Flagg  v.  Baldwin.  38  N.  .1.  E<i.  219.  An 
agent  employed  to  procure  a  purchaser  for  real  estate  cannot  recover  a  com- 
mission for  effecting  a  sale  to  a  person  who  has  agreed  to  buy  as  the  agent's 
silent  partner.     Reardon  v.  Washburn,  59  111.  App.  161. 

118  Irwin  v.  Williar,  110  U.  S.  499.  4  Snp.  Ct.  UM>:  Crawford  v.  Spencer.  02 
Mo.  498,  4  S.  W.  713:  Cobb  v.  ProU,  15  Fed.  774;   Bangs  v.  Horuiek,  30  Fed.  97. 


'26  BUOKKKS. 

\\'li:it  constitutos  jHTforinnnco  In  n  brnkcr.  so  that  hv  Is  ciilitlcd  to 
his  ((iiinnissions.  is  a  qiicslion  (hiMiHliiif;  on  tin-  fiicis  df  i-ach  case,  and 
tlM'  t'DiistriU'tion  of  the  contract  between  tlic  IhkUci  and  liis  i»rinci]»al. 
The  nsa;;cs  <»f  trade  in  many  cascw  determine  when  a  broker  has 
cai'nc<l  liis  commissions  under  ihr  inih'linilc  contracts  so  often  micicd 
into  in  comm»'rcial  transactions.  A  brokers  com|M'nsation  is  iLsually 
made  to  depend  on  his  smcess  in  lairyin;:  ihroii;,'h  the  iM'KOtiation 
which  he  und<Mtakes.""  A  bi-oker  is  not  entitled  to  comj)ensation 
when,  from  his  ne^H^ieiice  «>r  willful  misconduct,  the  bonelit  of  the 
transiction  is  lost  to  his  principal;'-'^  nor  when  he  violates  his  duty 
to  exercise  ;jood  faith.'"'  .\  lir<»ker  who  becomes  the  ]iurcha8er  of 
prop<'rty  placed  in  his  liands  for  sale  has  no  rii:ht  to  commissions.'" 

ii»  Wbero  tlio  t)n)kt'r's  cDUtinrt  witli  his  jjiiiuiiiiil  is  that  ho  shall  n-ct'lvc  all 
obtalucd  froui  the  purchaser  above  n  fixed  price,  the  broker  is  entltlt'd  to  no 
compensation  when  a  sale  Is  made  at  or  below  that  price.  Hops  v.  Sprnance, 
45  111.  308;  Beatty  v.  Ku.ssell,  41  Neb.  .'{21.  ".0  N.  W.  91!>.  Hut  where  there 
was  a  contract  to  pay  the  broker  a  comiuissiou  if  he  effec-ird  a  sale  at  $H5.(X)0, 
if  the  owner  subsecinenily  sells  to  a  purchaser  prod\iced  by  the  Imtker  at  $14,<^KK), 
the  broker  is  entitled  to  a  proportional  conmiissien.  without  an  e.xiinss  ;i;;ree- 
ment  to  pay.  Jones  v.  Adler,  34  Md.  440;  Byrd  v.  Frost  (Tex.  Civ.  Ai)p.»  Ltt  S. 
W.  4<i. 

120  Fisher  v.  Dynes,  i>'2  Ind.  348;  Ilaniond  v.  Holiday.  1  r.ir.  &  P.  3H4; 
Hurst  V.  Holdinp,  3  Taunt  32. 

121  A  real-estate  agent  Is  not  entitled  to  commissions  from  the  vend»'e,  as 
agreed  on  between  them,  where  the  agent  asks  the  vendee  a  price  greatly  In 
excess  of  that  fixed  on  the  land  by  the  vendor,  and  conceals  from  the  vendee  the 
fact  that  the  vendor  had  instructed  him  to  sell  to  tlie  former  at  the  reduced 
price.  I'Linney  v.  Hall,  101  Miih.  4r)l,  ol>  N.  W.  S14.  Where  brokers,  who  are 
authorized  to  sell  for  a  certain  price,  by  colorable  sales  to  an  employC'.  and  actual 
sales  of  part  of  the  prendses.  soil  for  a  much  larger  price  without  their  principal's 
knowhslge.  the  l)rokers  cannot  retain  the  conunlssion  charged  on  the  colorable 
sale  to  the  empl«iy6,  nor  charge  conunissions  on  the  actual  sales  made.  Powers 
V.  Black.  IW)  Pa.  St.  ir^i.  28  Atl.  1:53.  The  fact  that  the  broker  reported  to 
his  principal  that  an  olTer  of  ?H!.0(m»  for  the  land  had  Ihmmi  made.  Instead  of 
$15,fMir),  dors  n«»t  afTect  his  right  to  a  conunisslon,  where,  as  a  result  of  his 
negotiation,  a  sab-  for  the  smaller  sum  was  made.  Peckham  v.  .Ashhurst.  18 
U.  I.  Mi\,  2S  Atl.  .3.'!7.  'Hie  fact  that  the  purchaser  proctued  by  the  .-igent  was 
acting  In  behalf  of  anoUier  does  not  affj'ct  the  agent's  right  to  commissions. 
fJehilt  v.  Hldge,  117  Mo.  TtXi,  2.3  S.  W.  HS'2. 

122  The  fact  that,  unknown  to  the  principal,  Ji  iiicinlicr  of  a  llrm  employed  to 
sell  land  Itclongs  to  the  syndicate  to  whieli  the  land  is  sold,  bars  the  llrm  fron> 
recovering  a  Cumuiiiiiilou  for  the  sab-.  tlinti;:li  ihe  pri<v  received  by  tlie  prin<ii»al 


RIGHTS    AM)    IIAIUMTIKH    OK    BUOKKH8. 


27 


Tlir  hi(.l<«  r  iiiii.v  ;ils(».  l».v  special  a^'reriiK'nt  with  hiH  principal,  bo  con- 

tnicl  as  to  iiiakr  liis  <• pciisaliou  dcpcndonl  on  a  contin^j'ncy  which 

his  .'ll'orts  cannot  ((mliol,  even  thoiiKli  it  rohilc  to  the  acts  of  his  jirin- 
cipai.'--' 

The  naluic  of  the  services  n-ciuiicd  of  a  broker  is  determined  \>\  the 
business  in  whidi  he  is  engaj^ed.  Thus,  a  broker  who  is  employed  to 
l»ro<iiie  a  loan  is  entitled  to  his  commission  when  he  procures  a  lender 
ready,  willinj;,  and  able  to  lend  the  money  upon  the  terms  proposeil. 
1 1  is  lij^ht  to  commission  does  not  depend  upon  the  continj^ency  of  the 
appliraiifs  acceptance  of  tlie  loan,  but  upon  liis  p(.*rformance  of  his  part 
of  tile  contract.  The  principal  ( annot  deprive  Ihe  broker  of  his  com- 
mission by  refusinj;  to  accept  the  loan  which  the  negotiations  of  the 
latter  have  resulted  in  securinj;.^^*  So,  it  seems  tliat  a  loan  broker  is 
entitled  to  his  conmiissions.  although  the  lender  finally  refuses  to  make 
tlie  proposed  loan  lieraiise  the  borrower's  title  is  found  to  be  defect- 
ive.'-' 

So,  a  broker  to  ellect  a  sale  of  projieity  earns  his  commissions  by 
producing  a  purchaser  who  is  ready,  willing,  ami  aide  to  purchase  at 
the  price  fixed  by  the  principal.'-*'     A  written  contract,  binding  on  the 

was  fair,  and  all  that  ho  domauded.  Hammond  v.  Bookwalter,  12  Ind.  App. 
177,  ;{'J  N.  E.  872.  Whcu  au  agent  emitloycd  to  sell  real  estate  becomes  the 
purchaser,  though  it  be  with  the  consent  of  the  principal,  he  cannot  recover  a 
eomniissiou  for  the  sale,  in  the  absence  of  a  special  agreement  therefor  made  at 
or  after  the  time  he  presented  himself  as  purchaser.  Hammond  v.  Bookwalter. 
V2  Ind.  App.  177,  39  N.  E.  S72. 

i:i3  Bull  V.  Price,  7  Bing.  237;  Alder  v.  Jiuylc,  4  C.  B.  G35;  Tombs  v.  .Alex- 
ander, 101  Mass.  255;  Walker  v.  Tirrell,  Id.  257;  Hinds  v.  Henry,  36  N.  J.  Law, 
328.  Where  an  owner  of  mines  contracts  with  a  broker  to  pay  him  a  commis- 
sion "if  he  efifects  a  sale  or  deal  of  the  mines"  with  a  person  introduced  by  the 
broker,  and  the  agreement  made  with  such  person  is  made  conditional  on  his 
approval  of  the  organization  of  a  corporation,  and  fails  for  want  of  such  ap- 
proval, the  broker  is  not  entitled  to  his  commission.  Hammond  v.  Crawford,  14 
C.  C.  A.  109,  6G  Fed.  425.  Under  an  agreement  to  pay  commissions  for  nego- 
tiating a  "satisfactory  lease,"  the  lessor  cannot  arbitrarily  refuse  to  acci-pt  a 
lease  negotiated.     Mullally  v.  Greenwood,  127  Mo.  138,  29  S.  W.  1001. 

124  Vinton  v.  Baldwin,  88  Ind.  104.     Cf.  Corning  v.  Calvert,  2  Hilt.  (N.  Y.)  56. 

12B  Holly  V.  Gosling,  3  E.  D.  Smith  (N.  Y.)  2l)2.  Contra,  Budd  v.  Zoller,  52 
Mo.  2.'?8  (but  see  dissenting  opinion).  Statutes  in  some  states  limit  the  com- 
missions which  a  broker  may  charge  for  procuring  a  loan.  Broad  v.  Hoffman, 
6  Barb.  (X.  Y.)  177;    Revision  N.  J.  p.  519.  §  5. 

126  Moses  V.  Bierliiig.  31  X.  Y.  4G2;    Wylie  v.  Bank.  01  N.  Y.  415;    Gerding 


28  BROKERS. 

jiiincipal.  is  not  nocoswiry  if  (lie  puriliMSfr  itiiXMiml  liv  tin-  l)i-nk<»r 
stamls  ready  lo  jm  rfonn."' 

N  llasklii.  Ml  N.  Y.  514.  30  N.  E.  001;  Main:inl  v.  Moiiiiol.  •>2  N.  Y.  *_'<»:?; 
SiM'iiliI  V.  Iron  Co..  S;5  N.  Y.  .'^78:  Monlft'O  v.  IIIk'JJIh.s,  Tu  111.  ."►<):  LaiiK  v.  l!;ni(l. 
57  III.  Apu.  KM:  Hash  v.  Hill.  (Ill  111.  210;  Wllliani.x  v.  .McKlraw.  .-.2  Mi.h.  4.S0. 
IS  N.  W.  227;  Stewart  v.  Mather,  :{2  ^Vis.  :UI;  Hratlford  v.  Mnianl.  35  Minn. 
I',i7.  2S  N.  W.  24S;  llainllu  v.  S.lmlto.  'M  Miiiii.  4SU.  IS  N.  W.  41.".;  .McfJavock 
V.  ^V.m»lIl.'f.  20  How.  221;  MattiiiKl.v  v.  TiMinle.  105  Cal.  ."11.  .'.'.►  Pac  2iM): 
Hrnwn  V.  AVIlson.  f>S  Iowa.  .'lH;.  (57  N.  W.  251;  .Tones  v.  Ilollailay,  2  A]^]^.  P. 
C.  27r>.  Uefusal  of  the  priiKlpal  to  ••oiiii)lele  the  s:>le  does  lint  relieve  hlin  of 
his  liability  to  the  broker.  KocU  v.  Knuiierliiii;.  22  I  low.  i>;»:  <;ieiu\v(irih  v. 
Luther.  21  Barb.  (N.  Y.)  145;  Van  Lien  v.  Hyriies,  1  Hilt.  (N.  Y.»  134.  It  has 
been  held  that  a  broker  was  uot  entitled  to  connnlssions  when  the  purchaser 
produetHl  by  him  refu.>^ed  to  accept  a  quitclaim  deed,  and  demande<l  a  warranty 
deed.  Gareelon  v.  Tlbbetts.  84  Mc.  148.  24  Atl.  7M7.  Atithority  to  sell 
land  at  ?1G  per  acre,  for  one-third  cash,  and  balance  in  1.  2,  and  3  years, 
or  for  $10,000  cash,  is  not  comidied  with  by  a  sale  by  the  terms  of  which 
the  vendee  pays  .$5  cash,  and  iNil.mce  of  one-third  the  price  in  <»o  days, 
and  balance  of  the  price  in  .'If.  months.  Ilalsey  v.  Monteiro.  92  Va.  5S1. 
24  S.  E.  258.  A  contrac-t  by  di'fend:int  to  pay  plaintiff  a  specified  commis- 
sion after  six  months  from  the  delivery  to  defendant  of  a  deed  for  a  one-half 
interest  In  a  ranch  own»'(l  by  a  third  person  is  indivisible,  and  plaintiff  can- 
not, upon  defendant's  purchase  of  a  one-third  interest  in  such  ranch,  rei'over 
a  proportionate  commission.  \Vitte  v.  Taylor,  llo  Cal.  2J1.  42  Tac.  807.  A 
contract  givinp  the  proposed  purchaser  an  option  to  p\n(liasc  at  the  price 
and  terms  proposed  is  not  such  a  contract  of  sale  as  entitles  the  broker  to 
coMunissions  as  for  sale.  Kunyon  v.  Wilkinson.  Caddis  &  Co.,  57  N.  J.  Law. 
420.  31  Atl.  .'iOO;  Dwyer  v.  Kaboru,  t;  ^Vash.  2i;{.  :U{  Pac.  350.  Where  a 
broker  has  produced  a  purchaser  ready  and  willing  to  contract  on  the  terms 
stipulated,  a  subsetiuent  aj;reenient.  without  consideration,  not  to  claim  his 
cfiUimissions  until  delivery  of  the  deed,  is  not  binding?  on  him.  MiH'onil)  v. 
Von  Ellert,  7  Misc.  Hep.  50,  27  N.  Y.  Supp.  372.  A  broker  who  Is  prondsed 
a  <-ommlssion  for  selling  street-car  lines  to  a  certain  syndicate,  or  to  a  cor- 
poration or^anizecl  by  such  syndicate,  is  entitled  to  the  commission  on  effect- 
Inn  a  sale  to  a  railroad  company  organized  by  the  syndic:ite,  though  such 
company  was  not  iluly   incorporated.     Smith  v.  M:iylield,  i".«»  111.   .^pi•.  2t><!. 

>2Ti{ii,b  v.  Allen,  14'.)  r.  S.  4S1.  13  Sup.  Ct.  l>.".(i;  Ward  v.  Lawrence,  79 
111.  2t>5;  Levy  v.  Huff.  4  .Misc.  Kep.  ISO,  23  N.  Y.  Sui)p.  lonj;  Vaughan  v. 
McCarthy,  5^S  Minn.  1IM»,  tMJ  N.  W.  1075.  So,  where  a  loan  broker  is  emi)loyed 
to  Kecure  a  loan  for  his  principal,  It  Is  not  esst-ntlal  to  his  right  to  coiunds- 
slons  that  he  have  a  binding  contraci  with  the  yroyosed  Icniler.  Midiilciou 
V.  Thomimou,  105  I'a.  St.  112,  2l>  Atl.  7V>0. 


HKJIITS    AMI    I.IAlUI.ITlKa    OF    UROKEHS. 


29 


Snine — Ratponsihle  Piirch<is,r. 

1 1  is  ;i  prereqiiiHitc  to  tin-  broker's  rifjht  to  commiKfiions  lint  the 
proposed  piiirliiiscr  bo  riiiiiiiciiilly  able  to  carry  out  the  contract.'^' 
The  broker  mnlertakes  to  furnisli  a  jmichaser;  and,  when  oix'  ih  pre- 
Bented,  the  eiii|il<»yer  is  not  iHiiind  to  aeci'iit  liim  or  to  piiy  the  commis- 
sion, indess  he  is  ready  and  able  to  jxTforMi  tlie  contract  on  Iuh  part 
according;  to  the  terms  proposed;  but  if  the  principal  accepts  him, 
either  upon  the  terms  previously  proposed  or  upon  modified  terms 
then  a-,M('ed  uj.on,  and  a  valid  contract  is  entered  into  between  the  prin- 
cii)al  and  the  peison  i>resented  by  the  broker,  the  commission  is 
earn<(l.'-"  \\\\\  if  the  principal  rejects  the  purchaser,  and  the  broker 
claims  his  coniniission,  he  must  show,  not  only  that  the  person  fur- 
nish«-d  was  wilUnj,'  to  ac<ei)t  the  otTer  precisely  as  made,  but,  in  addi- 
tion, that  he  was  an  eli^nble  purchaser,  and  such  as  the  principal  was 
bound,  as  between  himself  and  the  broker,  to  accept.^''"  When  the 
principal  rejects  the  proposed  purchaser  without  cause  and  without 
objection  to  his  pecuniary  responsibility,  the  burden  of  proof  is  not  on 

128  rratt  V.  Hotchkiss,  10  111.  App.  G03;  Coleman's  Ex'r  v.  Meade,  13  Bush 
(Ky.)  358;  Hayden  v.  Grillo,  26  Mo.  App.  289;  Cliipley  v.  Leathe.  GO  Mo. 
App.  15.  Under  an  agreement  that  a  broker  shall  receive  a  commission  for 
finding  a  purchaser  for  property,  he  is  entitled  thereto  on  introducing  to  his 
principal  a  purchaser  to  whom  a  sale  is  made,  though  the  purchaser  fails 
to  meet  deferred  payments.  Hallack  v.  Hinckley,  19  Colo.  38,  34  Pac.  479; 
Stewart  v.  Fowler,  53  Kan.  537,  30  Pac.  1002.  Where  the  owner  of  per- 
sonalty agreed  to  pay  an  agent  a  commission  in  case  he  should  succeed  "in 
disposing  of"  the  property  on  acceptable  terms,  and  the  agent  procured  a 
purchusor  who  made  a  written  contract  with  the  owner  to  buy  the  goods, 
and  to  pay  for  the  same  partly  with  a  deed  to  certain  land,  and  such  pur- 
chaser was  unable  to  perform  his  contract,  for  want  of  title  to  such  land,  the 
agent  was  not  entitled  to  commissions.  Greusel  v.  Dean.  98  Iowa,  405, 
i;7  N.  W.  275.  A  real-estate  agent  who  offers  his  services  to  F.  to  effect  an 
exchange  of  F.'s  stock 'of  goods  for  land  belonging  to  T.  is  not  entitled  to 
compensation  for  bringing  F.  and  T.  together,  where  the  negotiations  fell 
through  because  T.  had  no  title  to  the  land  which  he  proposed  to  exchange. 
Freedman  v.  Gordon,  4  Colo.  App.  343,  35  Pac.  879;  Barber  v.  Hildebrand, 
42  Neb.  400,  CO  N.  W.  594;  Woolley  v.  Lowenstein,  S:i  Hun,  155,  31  N.  Y. 
Supp.  570;   Moskowitz  v.  Hornberger,  15  Misc.  Rep.  i'Ao.  38  N.  Y,  Supp.  114. 

129  Coleman's  Ex'r  v.  Meade,  13  Bush  (Ky.)  358. 

130  McGavock  v.  \Yoodlief,  20  IIow.  221;    Coleman's  Ex'r  v.  Meade,  13  Bush 
(Ky.)  358;    Neiderlauder  v.  Starr,  50  Kan.  700,  32  Pac.  359. 


30  niioKKRS. 

ihi-  liroktM"  to  sliow  fliaf  the  pnrfli;isrr  \\;is  .-iMc  Id  cmitv  oiil   llic  ron- 
fiart.  in  oKici'  tliMt  ln'  in;i\  iumomt  liis  »(tmmissi(ms."' 

iWfonuanve  within  Time  Given. 

\\\\i'vv  a  broker  lias  a  d('tinit«*ly  liinilcd  time  willilii  which  to  etTcit 
a  siih'  of  jiro|K'nv,  he  is  not  t'lilitltd  to  toiii|»cii8atiun  uuU'ss  he  |K'r- 
forms  his  iindertakiii«;  within  that  time' '-     The  casos  arc  not,  how- 

J»i  (lonliiiK  V.  lliiskin.  L'  Misc.  Hep.  172.  LM  N.  V.  Siipp.  (•>."(;;  I^ovy  v.  KufT, 
4  Misc.  Hop.  ISO,  23  N.  Y.  Snpp.  KKJ-J;  Cook  v.  Krofiuokf.  4  DjjI.v  (N.  Y.l  l-'tW; 
r.oss  V.  Broom,  31  Minn.  4S4,  IS  N.  W.  lilXi.  Solv»>nry  Is  presuraod  In  the 
absouce  of  evidence  to  the  contrary.  Hart  v.  IlolTinaii.  41  How.  Prac.  (N. 
Y.)  1(8.  Contra,  Iselin  v.  Grittitli.  r,2  Iowa.  G(38.  18  N.  W.  .ioj.  Where  the 
purchaser  furnished  by  a  broker  is  accepted  by  the  seller,  without  any  niis- 
represeutalion  on  the  part  of  the  broker  as  to  such  purchaser's  financial  stand- 
iiiji,  the  burden  of  proof  Is  on  the  seller  to  show  that  the  purchaser  is  not 
able  to  pay  for  the  goods  according  to  the  contract.  Fairly  v.  Wappoo  Mills. 
44  S.  C.  227.  22  S.  E.  108.  Where  the  proix>sed  purchaser  admits  that  he 
had  not  the  ability  to  pay  the  price  fixed,  his  testimony  that  he  was  actin;: 
in  behalf  of  a  syndicate,  and  that  he  would  have  l)een  prepared,  when  the 
time  arrived  to  complete  the  purchase,  to  find  the  money  reqtiired.  does  not 
.satisfactorily  show  his  ability  to  buy.  Mattingly  v.  Pennie,  lOo  CjU.  514.  .'?•.> 
Pac.  2<»0.  In  an  action  to  recover  commis.sions  for  the  sale  of  land  allej;e<l 
to  have  fallen  through  on  account  of  the  principal's  failure  to  procure  a 
patent  to  the  land  within  the  time  agreed  on,  the  intended  purchaser  being 
unable  to  complete  the  purchase  when  the  patent  was  secured,  the  agent 
«annot  recover,  unless  he  allirmatively  proves  that  the  purchaser  had  during 
the  time  the  actual  cash  to  make  the  payment;  It  not  being  sullicient  to  show 
that  he  had  property  out  of  which  the  price  could  have  been  ma<le  by  suit. 
Dent  V.  Powell.  03  Iowa,  711,  61  N.  W.  104."?. 

>»2  McCarthy  v.  Cavers.  OG  Iowa.  342,  2;'.  N.  W.  7.'i7;  W:iis..n  v.  Hrooks. 
11  f)r.  271.  3  Pac.  07;t;  Ilalperiii  v.  Callemh-r.  17  .Misc.  IJep.  ;u;2.  30  N.  Y. 
Supp.  lOiA;  Beauchamp  v.  Iliggins,  20  Mo.  Ap|».  .'>14:  Zeiiuer  v.  .Vntisell.  7.'t 
Gal.  509,  17  Pac.  <J42.  A  real-estjite  broker  who  produces  a  customer  after 
his  prlncijial  has  withdrawn  his  offer  to  sell  is  not  entitled  to  a  connnlsslon. 
Young  V.  Tiniuor.  1.">S  111.  42.S.  42  N.  K.  130.  afhrniing  r»7  111.  App.  •»;52. 
Where  the  minds  of  vendor  and  purcliaser  have  met  on  a  contract  to  sell  real 
••Htate,  the  broker  who  procured  the  execution  of  sudi  contract  is  entitled  to 
recover  his  promised  commission,  whether  or  not  the  contract  is  llnally  con- 
Mummated,  and  notwithstanding  any  vagueness  in  its  terms.  Folinsbee  v. 
Sawyer,  15  .Mlsc-.  Uej*.  20.'!,  'M\  N.  Y.  Supp.  40r».  Where  an  application  for  a 
loan  Id  made  to  a  broker,  who  secures  a  party  willing  to  make  the  loan,  but 
diM-8  not  so  notify  tin-  a[ipli<'ant,   and,  after  the  time  has  elapsol  within  wliii  ii 


RIGIITH    AM)    I.I  AlUI.I  riKS    OK     MIM  (KKUS.  31 

ever,  altoi^cllicr  siilisr.icNuv  ;is  (o  \vli;il  cuiisl  itiil'-s  such  pcintrm- 
ance.  ^\'ll('Il  a  sjilc  within  llu*  lime  liniitcrl  is  iiK-Ncntcd  hy  llie  ne^Ii- 
pMicc,  fault,  or  fi-nid  of  (ho  itriiicipiil.  tlic  Ijiokcr  can  recover  his 
coiuinissions.''''  In  some  cmscs.  i(  li.is  hccn  hchi  lh;il  the  siih*  must 
be  comph'tcd  wilhiii  llic  (iinc  Kitecificd.''"  In  others,  the  hrol.fr  has 
been  held  enlitled  to  compensation  when  he  produced  a  purchaser 
within  the  time,  to  wliom  a  Hale  is  niaih*  Jiftcr  (he  time  h:is  expired.'^* 

Sale  Comph'tt'd  hij  Pr'nu-ijuil — Broktr  Prixuiiixj  Cans,. 

A  broker  earns  his  commission  whenever  the  sale  oi-  <jtlni  iiusin<'ss 
about  which  he  is  employed  is  effected  through  his  agency.  Uut  he 
need  not  conduct  the  transaction  in  person.  After  the  broker  has 
produced  a  puichaser,  the  nejiodation  may  be  concbided  by  the  prin- 
cipal in  person,  and  (he  broUcr  will  be  entitled  (o  his  coniniission.^^" 

tJio  I)rolccr  was  to  place  tin-  loan  has  expired,  llie  applicant,  without  knowl- 
edge of  the  steps  takiMi  hy  the  broker,  .secures  the  loan  from  the  same  ijerson 
with  whom  the  latter  had  arranged  to  i>lace  it,  the  broker  is  not  entitle<l  to 
commission,  liiddison  v.  .Johnson,  50  111.  App.  173.  Where  a  contract  with 
a  broker  to  sell  a  note  and  mortgage  is  silent  as  to  the  time  within  which  the 
sale  is  to  be  made,  the  broker  is  entitled  to  a  reasonable  time.  Peterson  v. 
Hall,  61  Minn.  268,  63  N.  W.  733. 

133  Fultz  V.  Wimer,  34  Kan.  ,".70.  9  Pac.  310;  Oullahan  v.  Baldwin,  100 
Cal.  648,  35  Pac.  310;  Wilson  v.  Sturgis.  71  Cal.  220,  10  Pac.  772.  A  real- 
estate  agent  employed  to  sell  land  within  a  certain  time,  on  certain  terms, 
is  entitled  to  his  commissions  where  he  procures  a  purchaser  within  the  time 
willing  to  buy,  and  communicates  that  fact  to  the  owner;  and  the  owner,  by 
deferring  the  meeting  with  the  purchaser  until  after  the  time  of  the  agent's 
employment  has  expired,  caiuiot  defeat  his  right.  Vandcrveer  v.  Suydam, 
83  Hun,  116,  31  N.  Y.  Supp.  392. 

134  Fultz  V.  Wimer,  34  Kan.  570,  9  Pac.  310;  Watson  v.  Brooks.  11  Or.  271, 
3  Pac.  679;   Zeimer  v.  Anti.sell.  75  Cal.  509,  17  Pac.  642. 

136  Gofife  V.  Gibson.  18  Mo.  App.  1;  Wilson  v.  Sturgis,  71  Cal.  22»;,  if>  Pac. 
772. 

136  Martin  v.  Sllliman.  53  X.  Y.  615;  I.udlow  v.  Carman.  2  Hilt.  (X.  Y.)  107; 
Timberman  t.  Craddock,  70  Mo.  038;  Bass  v.  Jacobs,  03  Mo.  App.  303;  Loud 
V.  Ilall,  101>  Mass.  404;  Bornsteiu  v.  Lans,  104  Mass.  214;  Dowling  v.  Morrill, 
1(>5  Mass.  491,  43  N.  E.  295;  Howe  v.  Werner,  7  Colo.  App.  530,  44  Pac.  511. 
The  broker  need  not  be  present  during  the  negotiations  or  at  the  completion 
of  the  bargain.  Dreisback  v.  Kollins.  39  Kan.  268,  18  Pac.  187:  Sibbald  v. 
Iron  Co.,  83  X.  Y.  378;  Baker  v.  Thomas,  11  Misc.  Hep.  112,  31  N.  Y.  Supp. 
9U3. 


32  imoKKRs. 

If  (he  brisker  was  the  prticiiriii};;  cause  of  the  sale,  lie  can  i»'C(»vcr ; '*^ 
otIuTwise.  ho  cannot.'"'  TIk'  principal  netni  mil  kimu.  ai  llw  lime 
tho  sjilo  was  coinjilctcil.  that  tlic  purchaser  was  (»l»iaiiit'(l  iliruii;;h  the 
brttkcr's  clTorts.''"     Nor  need   tlie  ludker   hiwr   intKxliKtd   tlie  pur 

>'■  Vi>\H>  V.  IlriUs.  liis  Mass.  :<*<]:  Kitysti-r  v.  MnKcveiic.v,  '.i  l.ca  i  Iciiii.)  1  t>; 
Earp  V.  rumiiiliis,  M  I'a.  St.  :VM:  Lloyd  v.  Mutthows.  .'>!  N.  Y.  IJt;  Uodlleld 
V.  IVpp.  ."{S  N.  Y.  'JIJ.  The  completed  Iraiisacflon  need  imt  result  In  a  bcncflt 
to  tlu'  principal.  Schwarizo  v.  Yearly.  .".1  Md.  270.  An  owner  of  real  estate, 
after  her  efforts  to  sell  to  W.  liad  failed  and  been  abandoned,  put  It  In  the 
b:uids  of  a  real-estate  a>;ent  to  sell  at  a  certain  i)rlce.  He  then  eoinmenced 
negotiations  with  \V..  and.  while  it  still  remained  in  his  hands,  without  no- 
tice to  him.  the  owner  sold  It  to  ^V.,  for  a  l«ss  price  than  that  at  which  the 
agent  had  Ihh'u  authorized  to  sell.  Held,  that  he  was  entitled  to  commissions 
on  the  amount  for  which  it  was  sold.  Schlegal  v.  Allerton.  (>r>  Conn.  2<>o,  32 
Atl.  .'W13.  Where  a  real-estate  agent,  with  whom  land  has  been  i)laced  for 
sale,  places  it  with  another,  reserving  the  right  to  sell  the  land  himself,  he 
cannot  sell  the  l.ind  to  a  customer  of  the  latter,  and  thereby  defeat  the  lat- 
ter's  right  to  his  commissions.  Leonard  v.  Roberts,  20  Colo.  .88,  34)  Pac.  880. 
Whert?  an  agent's  authority  to  sell  lands  uinin  certain  terui.s  is  revoked,  and 
the  owner.  In  good  faith,  thereafter  sells  upon  less  favorable  terms  to  one 
who  had  declined  to  purchase  from  the  agent,  such  agent  is  not  entitled  to 
commissions.  Bailey  v.  Smith,  103  Ala.  i'Al,  15  South.  Ixki.  a  real-estate 
broker  is  not  entitled  to  commissions  on  a  sale  of  land  where  the  purcha.ser 
bought  solely  uikiu  his  own  information,  after  uegotintlng  with  the  owners, 
and  was  not  intluenced  by  the  broker,  though  the  broker  made  otTorts  to  sell 
the  land  to  such  purchaser.  Brown  v.  Shelton  (Tex.  Civ.  App.)  23  S.  W.  483. 
Where  a  real-estate  agent  brings  the  parties  together,  and  negotiations  are 
thus  opened  between  them,  which  continue  witliout  withdrawal  of  either 
party  therefrom,  and  culminate  In  a  sale,  though  on  dilTercut  terms  than  orig- 
inally arranged,  the  broker  is  entitled  to  his  commissions.  Jones  v.  Henry, 
15  Misc.  Rep.  151.  .'JO  N.  Y.  Supp.  4S3. 

ist  Stewart  v.  Mather,  32  Wis.  .Ml;  Wyckoff  v.  Bliss.  12  Daly  (N.  Y.)  .'?24; 
Sussdorfr  V.  Schmidt,  r>5  N.  Y.  :{l!i;  McClave  v.  Paine.  40  N.  Y.  .'i«l;  Tyler  v. 
Parr,  52  Mo.  241);  Carter  v.  Wel>ster,  70  111.  i'.Ct.  Where  a  broker  empi  iye<l 
to  procure  a  customer  sends  to  his  principal  one  with  whom  the  latter,  with- 
out the  broker's  knowledge,  is  already  in'gotiating.  and  the  principal,  ignorant 
that  the  broker  and  customer  have  had  any  communlc.-ilion.  deals  with  the 
euKtomer,  the  broker,  whose  acts  hntl  no  intluence  in  elTectJng  the  trade,  Is 
not  entitled  to  commission.     NetifcM  v.  Oren.  »iO  111.  Ai)p.  .'150. 

>3»  Lloyd  V.  .Matthews,  51  .N.  Y.  124;  Ilanford  v.  Shapter,  4  Daly  (N.  Y.) 
243;  Kelly  v.  Stone,  04  Iowa.  31(;.  112  .\.  W.  .S-12;  Bryan  v.  Abert,  3  App.  D. 
O.  IbO.     But  see  Soulo  v.  Deering,  87  Me.  305,  32  Atl.  008. 


UK.in-^     AMI    I.IAIlll.niKS    <(!•■     IllfdKKKS. 


33 


clinscr  \*>  till'  |.i  iiifi|.;il,""  m  i\i\\  Know  ili«-  |iiiicli;is.'r  himself.'*' 
Thus,  wht'ir  ilir  oiH-  \vli(t  |»m(li;isrs  the  priiiciiKil's  propcily  first 
hiiiiis  thill  il  is  for  .silc  frciiii  llic  advci  I  isrim  ills  (if  ihc  ImoU.t.' *-  or 
from  SI  third  pt  rsoii  lo  whom  lh<'  hrokt-r  \\:u\  commiiirKMi'tl  lh<'  fact.'*' 
\\li(ii  a  l.roivcr,  ha\iii<,^  Imcii  unsiiccrsKfiil  in  liiidiiiK  a  pnrrhastT.  ahai>- 
<h»iis  llic  iiiHh-rlaiciiij;,  in-  (hx-s  not  hcromr  ciititlod  to  a  commission  if 
the  proiicrty  is  siil»s«'(pi(*nlly  sold  to  one  to  whom  he  bad  tried  to  sell, 
l.iit  failed.'** 

Si//e   I*/''  I',  iitiil  In/    I'l-iiirijiill. 

A  brokci  has  pril'ormi'd  his  duly  when  he  finds  some  om-  who  is 
ready,  willing:,  and  able  lo  pniihase  on  ihe  iciuis  jirojioH-d  by  hiH 
principal.  When  the  eoniia.i  which  the  prin.ijKil  desires  to  enter 
into  has  been  made,  ihe  broi<er  is  entith'd  to  his  commissions.  The 
principal  cannot  (le|irive  the  broker  of  this  riji;ht  by  subsfMiuently  re- 
leasinj;  the  i.urchaser  from  his  contract  to  bny;  nor,  if  the  purchaser 
refuses  to  perform,  can  a  principal,  who  lefuses  to  brin^^  an  action  for 
specitic  performance,  set  up  the  pni-chaser's  breach  of  the  contract  of 
sale   as  a   defense    to   the   broker's  action    for   comiiensation.''"'     It 

KoRojstor  V.  Magevenoy,  1>  Lea  fTcnu.)  148;  Wylie  v.  Bank,  Gl  N.  Y.  415; 
Anderson  v.  Cox,  IG  Neb.  10,  20  N.  W.  10.  But  see  Getzler  v.  Bnehm,  16 
Misc.  Rep.  390,  38  N.  Y.  Supp.  oJ. 

Ki  Derriclison  v.  Quinliy.  43  N.  .1.  baw,  373;  Lincoln  v.  McClatcbiL'.  36 
Conn.  130;  Wylie  v.  Bank.  t;i  N.  V.  415.  And  see  Newhall  v.  Pierce,  115 
Mass.  457. 

I*-  Earp  V.  ("uiinniiis,  54  Pa.  Si.  '.VM. 

143  Anderson  v.  Cox,  10  Neb.  10,  20  N.  W.  10;  Lincoln  v.  McClatchle.  36 
Conn.  13n.  Where  a  broker  talks  about  laud  which  he  has  for  sale  Uhe 
owner  rctaininj.'  a  ri^'ht  to  sell  iti  to  one  who,  not  acting  for  the  broker,  men- 
tions it  to  a  third  person,  who  purchases  from  the  owner,  he  is  not  entitled  to 
a  commission.     (Ileason  v.  Nelson,  102  Mass.  245.  38  N.  E.  407. 

144  Sibbald  v.  Iron  Co.,  83  N.  Y.  378;  Wylie  v.  Bank,  c.l  N.  Y.  415;  Holley 
V.  Townsend.  2  Hilt.  (N.  Y.)  34;  Bouscher  v.  Larkins.  M  llmi.  2S.8,  32  N.  Y. 
Supp.  305;  Earp  v.  Cummins.  54  Pa.  St.  304.  Cf.  Ware  v.  Dos  Pas.sos,  4 
App.  Div.  32,  38  N.  Y.  Supp.  CwS.  A  real-estate  In-oker  is  not  entitletl  to 
commissions  for  procuring  a  purchaser  for  lands  where  the  sale  is  .-iliandMiicd 
with  his  own  consent.     Sawyer  v.  Bowman.  91  Iowa,  717,  59  N.  W.  27. 

1 4 r.  Parker  v.  Walker.  80  Teun.  ."I'.O.  S  S.  W.  391;    Love  v.  Miller.  .">3  Ind. 

2(M.     But  where  the  contract  entered  into  contains  a  stipulation  that,  in  case 

either  party  should  fail  to  comply  with  the  contract,  a   forfeiture  of  .Sl.fKK) 

should  Ik?  paid  by  the  party  in  default,  the  broker  is  not  entitled  lo  his  com- 

liKOKEIib — '6 


o4  IU{(  (KICKS. 

wuiilil  l»i'  no  defense  to  say  thnl  ;i  bill  lo  enforce  spocilii-  pn  fniinaiue 
would  Itr  of  no  avail  on  acconnl  of  ilu-  iturcliascr's  insohcncv.  The 
jiiincipal  was  not  bound  (o  acf('[i(  (In*  iiroposcd  i»iii(liaser,  uidess  he 
WIS  altic  to  jK'i'forni.'^*' 

\\"h('n  iH'ifoi'niancc  1»,\   a  brolcci-  is  |)r«\('nl(Ml  by  liis  principal,  tlio 
brokci"  is.  nevertheless,  entitled  to  conipensai  ion.      The  inineipal  can 
not.  by  i-efnsinj;  to  complete  the  contrail   when  ;i  |iii)pei   cnstoniei-  is 
piodiiced  by  the  broker,  escajie  iiabiJiiN   lo  ilie  laller.''"     Nor  does  a 

iiiis>i(iii  il'  the  ijurcba.scr  docs  \w\  iicironii.  r.fiiiifii  v.  lO^iiu,  3  Misi-.  licit. 
4-Jl.  S.',  N.  Y.  Siipp.  154:  KimluTly  v.  1  Icii.lnsnii.  J'l  .M.l.  :A'2;  Aiglcr  v.  I.nii.l 
Co..  r.l  Kau.  718,  33  Pac.  '>'X\.  liut  .<ie  Iticlmrds  v.  Jackson.  31  Md.  Ur>o.  In 
(Jilder  v.  I>avis,  137  N.  Y.  r>(i4.  :!.",  N.  K.  r»'.Kt,  the  brolccr  was  iu  a  similar  case 
;:ivi'u  a  commission  on  tlic  roilCit   money. 

140  See  ante,  p.  2t). 

i-i"  Midiiletou  v.  ThoiHii>^oii.  H;:;  I'.-i.  Si.  IfJ.  ■_".»  .\tl.  7!Mi;  .McCJiiire  v.  Carl- 
sou,  til  111.  App.  UO.J:  Cook  V.  Fiske.  12  (Jia.v  (Mass.i  4!)1;  Felts  v.  Buicher. 
93  Iowa.  414.  <!1  N.  W.  1)01:  Nesbitt  v.  Ilelser.  4U  Mo.  :!S.-,:  Reeves  v.  Vette. 
t\2  Mo.  App.  440:  (;oss  v.  Stevens.  :!_'  Mian.  47l'.  '2\  N.  W.  7>V.\:  Kit'iiici-  v. 
Kice,  88  Wis.  10,  5{>  N.  \V.  4.".0:  Kock  v.  Kmmeiliiij:.  21'  How.  c.'.i;  \\aisoii  v. 
Hrooks.  8  Sawy.  31(>.  l.">  Fed.  .">40.  Where  the  pfincipal  sold  Ihe  properly 
himself,  luit  permitted  the  broker  to  make  further  eft'orts  to  secure  a  i)ur- 
chaser  wiilmut  informiug  him  of  the  sale,  he  was  held  liable  for  commissions. 
Lane  v.  .MbrijihI.  49  Ind.  27."t.  So.  where  :\  purchaser  is  procured  by  the 
broker,  and  the  itriiicipal  f:ives  an  option  for  .-i  limiU'd  time  to  the  proposed 
Iturehaser.  but  sells  to  another  within  that  time,  the  broker  may  recover  com- 
missions. Heed's  Kx'rs  v.  Keed.  SJ  I'a.  St.  4:J(i.  A  real-estate  ajjeut,  wlm 
l»rocures  a  purchaser  able,  ready,  and  williiifx  to  l;ike  the  property,  and  pay 
for  it  at  the  price  aj^reed,  and  who  is  jirevented  from  doiiis  so  by  his  prin 
cipal's  refusal  to  carry  out  the  coiiiiaci.  Is  ciiiiilcd  to  coinpeiisalion,  ihoiijjh 
the  j)urchaser  C(Hild  not  have  been  coniiirllcd  to  rjiny  out  his  contract  if  he 
hail  chosen  to  set  np  tlic  sininte  of  frauds,  lloidcn  v.  Slarks.  l.">'.»  .Mass.  .">o.",. 
:'.4  N.  K.  HMi9.  Defendant  emidoyed  plaint ilT  as  a  biokci'  lo  sell  il^ooiIs  at  a 
certain  cfunmission.  IMaintifT  itrocined  a  purchaser,  lo  whom  defeiidani 
shii>|(ed  the  piods.  bill  they  were  icjcclcd  by  iiiin  as  iiol  of  the  qu.iliiy  siwc 
ifit'd.  Held,  that  iilainiilT.  havin;j  performed  l:is  pari  of  ilie  coiilr;ici.  was 
ciiiiilcd  lo  his  connnission.  Strong  v.  lirownsli.nc  Co..  C  .Mis.-.  Kep.  ."i7.  3'> 
S.  Y.  Snpp.  .sr».  Where  a  laiido\vn<'r  refuses  to  execule  a  deed  pursuaiu  to 
the  iirms  of  sale  made  by  his  authorized  a^cnt.  neilher  Ihe  :ip:enl  nor  the 
piirciiaser  need  tender  the  imiciiMse  nioiiey  before  liic  .Mireiil  cin  sue  for 
his  services.  Vau;:ban  v.  .McC.iilhy.  .V.t  .NFiim.  I'.Ht.  c,o  N.  W.  bi7."..  .\  broker 
wlio  a;rn'<'S  to  procure  a  lo;in  |»erforins  his  contr.ici  wlien  lie  siM-ures  ;i  com- 
pany able,  williii;,'.  and  rendy  lu  make  the  loan,  and  need  not  lender  or  cause 


IfKllirs    AM)     I.IAIilMTll-.M    OK     ItKdKKUS.  oO 

(l,.r,.(l  ill  llic  piiiicipiirs  (illc.  wliiili  cniiscs  Hk-  |tiiirli;i>ci-  lu  fc|ci-t  i(, 
iclicxc  llic  |iriiMi|i;il.' '''  unless  llir  lii«»U<'i-  kin\\  of  lln'  <lclVct ."" 
>\'li(ic  the  |niii(i|»jil  sees  tliiil  llu'  broUci-  is  iihoiil  In  <'lli-(i  a  sal<\  lie 
caiiiKtl   cul    (ilV  (lie  lallcf's  ri^lil    (o  conimissioiis.   I»y  aiiv   IraiKliilcnt 

f(.  lie  iriidcivd  tlK'  auKiiiiit  of  tlic  Idiiii  before  he  is  eiilifled  to  his  eoinpensa- 
tiiiii.  i'hisli  r  V.  Cove.  -4S  Mo.  App.  -»•"">;  Felford  v.  Hriiikeilioff,  45  III.  App. 
5S(;.  One  iiKiy  recover  in  ;iii  ;i<Hnii  on  :i  contract  to  pay  him  a  certain  sum 
on  seciuiii.ii  a  inMcliascr  for  (lef<ii(l.iiifs  hind,  wliere  it  appeared  thai  lie 
conducted  lo  tlie  luciiiises  one  willi  w  lioiii  dricndaiit  after\var<ls  entei'ed  into 
fl  written  atrreement  for  tlie  sale  of  thr  land.  thou<ili  the  land  was  in  fact 
sold  to  another.  Koland  v.  Kistle.  ;»L'  Inwa.  :{r,!).  (K)  N.  W.  f«2.  Where  real- 
ostaie  hrolcers  procure  a  contract  for  the  sale  of  land,  and  the  vendor  volun- 
tarily r«'leases  the  purchaser  from  his  obliftation.  the  brokers  are  still  eniirled 
to  their  conunissions.  Cranper  v.  (Jrittin.  43  111.  App.  421;  Foster  v.  Wyiiii. 
51  111.  Ai)p.  401.  A  real-estate  agent  who  procures  a  purchaser  ready  and 
wiliiiiji-  to  purchase  land  on  the  terms  on  which  he  was  employed  to  sell  is 
cniitlcd  to  his  commissions,  though  the  vendor,  with  knowledge  thereof,  vol- 
mitarily   completes   the   sale  on  different    terms.     Corbel   v.    Beard.   92    Iowa. 

n'<  Kiiai»p  v.  Wallace.  41  X.  Y.  477;  Doty  v.  Miller.  4.3  Barb.  (X.  Y.)  .52!»: 
(Hentworth  v.  Luther.  21  Barb.  (X.  Y.)  145;  Allen  v.  .Tames.  7  Daly  (X.  Y.i 
i:;:  Coiiy-.iles  v.  Broad.  .'.7  Cal.  224;  Stage  v.  Gosse,  lln  Midi.  l."">:j.  (17  X.  W. 
1108;  Koberts  v.  Kimmons.  05  Miss.  ;'>.'i2.  3  South.  730;  Sullivan  v.  Hampton 
(Tex.  Civ.  App.)  32  S.  W.  2:35;  (Joodridge  v.  Holladay.  IS  111.  App.  303;  Davis 
V.  Morgan,  96  Ga.  518,  23  S.  E.  417;  Davis  v.  Lawrence,  52  Kan.  :'.S3.  34  Pa<-. 
1(K">1;  Topping  V.  Healey,  3  Fost.  &:  I'\  325.  But  see  Tombs  v.  Alexander. 
101  Mass.  2.55;  Rockwell  v.  NCwioii.  44  Conn.  333:  Blankenshiiis  .Kdmf  v. 
Kyerson.  .50  Ala.  420.  Kefus.il  of  the  principal's  wife  to  release  her  dower 
does  not  relieve  him  of  lialiiliiy  to  the  broker.  Clai)p  v.  Hughes.  1  riiil.i. 
(Ba.i  3S2;  Hamlin  v.  Schulle.  ;;4  Minn.  .5.34.  27  X.  W.  .3(11.  But  see  Hill  v. 
Jones.  152  Pa.  St.  43.3.  25  Atl.  8.34.  A  broker  employed  to  obtain  a  loan  is. 
in  the  absence  of  a  condition  to  the  contrary,  entitled  to  commissions  on  ob- 
taining a  i>erson  al»le  and  willing  to  make  the  loan,  though  it  is  not  consum- 
m.ited  because  the  title  to  the  premises  on  which  the  loan  was  to  be  made 
is  defective,  in  that  the  building  thereon  encroaches  on  adjoining  property. 
Kgan  v.  Kieferdorf.  10  Misc.  Kep.  ;iS5.  38  X.  Y.  Supp.  81.  But  contra  under 
a  contract  making  cDinpensation  depend  on  the  payment  of  the  purchase 
price.  Cremer  v.  .Miller,  .5r,  Minn.  52,  57  X.  W.  318.  In  Condict  v.  Cowdrey. 
i:'.;>  X.  Y.  273.  34  X.  10.  7M.  it  was  held  that  a  broker  was  not  entitled  to 
conunissions  where  the  contract  of  purchase  was  conditional  on  the  title 
being  foimd  as  represent e<i.  and  investigation  showed  that  the  principal  had 
no   title. 

i*9  Hart  V.  llopson,  52  Mo.  App.  177. 


36  BROKERS. 

device.^'"  When  the  purchaser  refuses  to  pei-fonii  Ixcniisc  of  false 
representations  made  by  the  owner  respecting  the  i»i()i>erl y.  this  will 
not  deprive  the  broker  of  his  commissions.^''^ 

Exclusive  Agency — More  tJian  One  Broher  EmpJoijcd. 

When  an  owner  of  pi'operty  lists  it  with  a  broker  for  sale,  he  does 
not.  without  an  express  aj2;reement,  {2,ive  the  broker  the  exclusive  rijj;ht 
to  Ml.  The  owner  may,  of  course,  agree  not  to  sell  himself  or 
throu^di  any  other  ajrent.^''-  In  the  absence  of  such  an  agreement,  the 
principal  may  effect  a  sale  independently  of  the  broker's  efforts;  and, 
if  he  do  so,  he  will  not  be  liable  to  the  broker  for  the  payment  of  com- 
missions.^ ^^     It  has,  however,  been  intimated  in  souie  cases  that  the 

150  Stewart  v.  Mather,  32  Wis.  344:  Fox  v.  Byrues.  .VJ  X.  Y.  Suinn-.  Ct.  150; 
Briggs  V.  Boyd.  56  N.  Y.  289;  Keys  v.  .Tohnson,  68  Pa.  St.  42;  Reed  v.  Reed, 
82  Pa.  St.  4*iO;  Lane  v.  Albright.  40  Ind.  275;  Doonan  v.  Ives.  73  Ga.  295. 
And  see  Bash  v.  Hill,  62  111.  216;  Nesbitt  v.  Helser.  49  Mo.  .383.  A  vendor 
cannot  escape  liability  for  commissions  to  the  agent  employed  to  negotiate 
a  sale  of  the  land,  on  completing  himself  a  sale  to  a  purchaser  with  whom 
the  agent  had  been  negotiating,  by  including  in  the  sale  otlier  lands  in  addi- 
tion to  those  the  agent  was  employed  to  sell.  Ivanson  v.  Weston.  110  Mich. 
240.  68  N.  W.  152. 

151  Glentworth  v.  Luther,  21  Barb.  (N.  Y.)  145. 

152  Ward  v.  Fletcher,  124  Mass.  224;  Stringfellow  v.  Powers,  4  Tex.  Civ.. 
App.  199,  23  S.  W.  313;  Levy  v.  Rothe,  17  Misc.  Rep.  402,  39  N.  Y.  Supp. 
1057.  An  exclusive  agency  may  be  given  by  contract,  and  the  principal  may 
agree  to  pay  a  commission  if  he  sells  himself  within  the  time  given  the  broiler. 
Levy  V.  Rothe.  17  Misc.  Rep.  402,  39  N.  Y.  Supp.  1057:  Rucker  v.  Hall.  105 
Cal.  425,  38  Pac.  962;  Holland  v.  Howard,  105  Ala.  538,  17  South.  35.  One 
who  agrees  to  allow  a  real-estate  broker  commissions  on  sales  of  land  made 
by  himself  is  not  liable  for  commissions  upon  making  a  conveyance,  absolute 
on  its  face,  but  which  in  fact  is  a  mortgage.  Terry  v.  Wilson's  Estate,  50 
Minn.  570,  52  N.  W.  973. 

i53McClave  v.  Paine,  49  N.  Y.  561;  Hay  v.  Piatt.  66  Hun.  488.  21  N.  Y. 
Supp.  3C.2;  Carlson  v.  Nathan,  43  111.  App-  •><"'^;  Metzen  v.  Wyatt,  41  111.  App. 
487;  Vandyke  v.  Walker,  49  »to.  App.  381;  Lawrence  v.  W(Mr.  W  Colo.  App. 
401,  33  Pac.  646.  The  broker  did  not  have  the  exclusive  riglit  to  sell.  After 
he  had  found  a  purchaser  ready  and  willing  to  buy  on  the  owner's  terms, 
but  before  he  had  notilicd  the  owner  tliereof.  the  owner  found  anotlier  pur- 
ciiaser,  and  closed  a  sale  with  him.  Ilehl,  the  owner  was  not  liable  to  tlie 
broker  for  a  commission.  Baars  v.  Hyland.  (U".  Minn.  1.50,  07  N.  W.  1148. 
But  see  CarroU  v.  PetUt,  67  Ilun,  418,  22  X.  Y.  Supi).  -'50. 


RIGHTS    AND    1,1  AIUI.ITIKS    OF    BHOKKKS.  37 

broker  is  (Militlcd  to  a  reasonable  time  within  which  to  make  a  sale.^"'* 
Not  only  may  I  he  principal  sell  himself,  but  he  may  employ  other  bro- 
kers to  sell  the  property,  and  he  will  be  bound  to  pay  commissions  only 
to  the  one  who  secures  a  purchaser.^ ^'^^  A  sale  by  one  broker  is  a 
revocation  of  the  authority  of  the  others  without  any  notice  to  them;  ^'"'^ 
and  a  broker  will  not,  by  subsequently  producing  a  purchaser,  have 
any  claim  on  tlie  ])rincipal  for  commissions.^^'' 

If  a  broker  who  hrst  procures  a  purchaser  reports  his  offers  to  his 
principal  without  identifying  the  i)erson  from  whom  they  come,  he 
cannot  reco\er  commissions  in  case  of  a  subsequent  sale  through  an- 
other broker  at  the  same  price,  to  the  same  purchaser,  unless  it  ap- 
pears in  evidence  that  the  seller  knew  this  fact,  or  that  notice  was 
given  him  by  the  })laintiff  before  the  completion  of  the  contract  and 

15*  Charlton  v.  Wood,  11  Heisk.  (Tenu.)  19. 

155  Ward  V.  Fletcher,  124  Mass.  224;  Dreyer  v.  Ranch,  42  How.  Prac. 
<N.  Y.)  22;  Livezy  v.  Miller,  61  Md.  336;  Mears  v.  Stone,  44  111.  App.  444; 
Jenks  V.  Nobles,  42  111.  App.  33;  Brennan  v.  Roach,  47  Mo.  App.  290.  A 
real-estate  broker  who  iirocures  a  purchaser  for  realty,  and  brinjis  the  par- 
ties together,  is  entitled  to  his  commission,  although  the  sale  is  consummated 
by  another  broker  ui)on  different  terms.  Wood  v.  Wells.  103  Mich.  320.  61 
N.  W.  503.  Plaintiff,  having  been  employed  as  broker  to  sell  property  for 
defendant,  introduced  another  broker  as  a  customer,  but  the  negotiations 
were  unsuccessful.  Afterwards  defendant  employed  the  broker  so  intro- 
duced, and  he  consummated  a  sale.  Held,  that  plaintiff"  was  not  entitled  to 
the  commission.  Latshaw  v.  Moore,  53  Kan.  234,  36  Pac.  342.  A  broker  is 
not  entitled  to  commissions  for  a  sale  where  the  customer  found  by  him. 
having  declined  to  purchase,  thereafter  calls  the  attention  of  a  third  party 
to  the  land,  who  completes  the  purchase  through  another  agent.  Thuner  v. 
Kanter,  102  Mich.  59.  60  N.  W.  299.  A  broker  under  a  contract  for  com- 
missions for  introducing  a  purchaser  ready  and  willing  to  buy  is  not  entitled 
thereto  for  introducing  a  person  at  the  time  not  ready  or  willing  to  buy, 
though  a  few  weeks  later  he  is  introduced  by  another  broker,  through  whose 
efforts  a  sale  is  made  to  him.     Piatt  v.  Johr,  9  Ind.  App.  58,  36  N.  E.  294. 

156  Ahern  v.  Baker,  34  Minn.  98,  24  N.  W.  341.  Withdrawing  the  sale  of 
the  property  from  one  is  not  notice  to  the  others,  or  a  revocation  of  their 
authority.  I.loyd  v.  Matthews,  51  N.  Y.  124.  Where  two  brokers  are  em- 
ployed to  secure  a  loan,  acceptance  of  a  loan  negotiated  by  one  is  a  revoca- 
tion of  the  other's  authority.     Glenn  v.  Davidson,  37  Md.  365. 

157  Ahcru  V.  Baker,  34  Minn.  9S,  24  N.  W.  341. 


00  LtKDKICKS. 

paviiu'iit  of  coiiiinissions  (o  llic  sccoihI  Itrokcr."^'''  If  tlicrc  be  hut  one 
l)i(»ki'i'  (Miiplovcd.  lie  r;m  with  safety  wilhliold  ilw  iiaiiic  of  tlic  pur- 
cliastM-  tuilil  (lie  sale  sliall  lia\('  been  iiuuic  Hut,  as  llio  cmitloyiiiciit  (»f 
Olio  hi-okcr  iloos  not  luccludc  the  eiiiplo.vmeiit  of  auotlicr  to  piociiro  a 
liuicliasci'  for  the  same  ju-operty,  it  becomes,  therefore,  the  duty  of 
liic  broker  wiio  jiroeures  o\u\  and  who  hxiks  lo  llie  seciiiity  of  his  com- 
missions, to  report  the  name  and  off<'r  to  his  jirincipal.  Ihat  tlie  latter 
may  be  nolilied  in  time,  and  thus  put  upon  his  guard  before  lie  pays 

1  he  coiiimissions  to  another.'''* 

J\tf't'vt  of  Requiring  a  Licmxe. 

In  many  instances,  statutes  nud  oi-dinances.  mainly  foi'  janposes  of 
raisinj;  re\-enne,  recpiire  brokers  to  lake  out  licenses.  If  a  broker  fails 
to  comply  with  such  a  recpiirenient,  he  cannot  recover  (^onnnissions 
for  business  transacted  by  him.'*'"  To  prevent  such  a  lecovery,  it  is 
not  necessary  that  the  statute  declare  the  contract  to  pay  commissions 
vo'd.^'"''  r>ut  a  broker  brinjiin<i  an  adion  for  commissions  is  not  re- 
(piired  to  show  thai  he  had  a  license.^""  If  it  api)ears  on  the  trial  that 
he  did  not  have  the  re(piired  license,  his  action  will  fail."^  A  statute 
re(piirinj;  brokers  to  be  licensed  does  not  ajiply  lo  one  employed  on  a 
salary.^ °*  nor  to  one  not  enj>ajied  in  business  as  a  broker  regularly, 
but  merely  negotiating  a  single  transaction.' •*•' 

1.-.8  Tinges  v.  Moale,  'l:^  Md.  -180;  Ejrglt^stou  v.  Austin.  27  Kan.  245:  Clif- 
ford V.  Meyer,  0  Ind.  A  pp.  ('>:«.  34  N.  E.  2;{. 

150  Vreeland  v.  Vetterlein,  33  N.  J.  Law.  247;    Tinsios  v.  Moalo,  25  Md.  480. 

loochadwick  v.  Collins,  2(5  Pa.  St.  i;W;  Johnson  v.  Hulings.  103  Pa.  St. 
40S:  Holt  V.  (ireen,  73  Pa.  St.  IDS;  Ilustis  v.  Pickands.  27  111.  App.  2T0; 
^^'llitlit'ld  V.  Iluling:.  50  111.  App.  170;  Stevenson  v.  Ewing,  87  Teun.  4(5,  9 
S.  W.  2:;o;  lUchardson  v.  Hrix,  !t4  Iowa.  cc'c..  (■>:!  N.  ^^'.  325;  Yount  v.  Den- 
\m\'A.  52  Kan.  G29.  35  Par.  207. 

"1  Holt  V.  Green,  73  Pa.  St.  IDS:  Vouiil  v.  1  tciiuinj;.  52  Kan.  c,j<»,  35  Pac, 
207.     Contra,  Fairly  v.  Wai>poo  Mills,  44  S.  C.  227,  22  S.  E.  los. 

"••- Shepler  v.  Scott.  85  Pa.  St.  :'.2t). 

I'l'!  Johnson  v.  Hulings,  103  Pa.  SI.  4'.lS:    Holt  v.  (iiccn.  7:'.  P.i.  St.  198. 

I'n  Portland  v.  O'Neill,  1  Or.  218.     And  see  Spear  v.  Hull.  40  111.  App.  348. 

ler,  O'Neill  v.  Sinclair,  153  111.  525.  :!9  X.  E.  124;  Jackson  v.  Hough.  .'{S  W. 
Va.  2:'.<;.  18  S.  E.  575;  Chadwi<  k  v.  Collins,  2(J  Pa.  St.  i:!.S;  .loliiisou  v.  Wil- 
liams, 8  Ind.  Ai)p.  G77,  3G  2s'.  E.   107. 


KIGHTS    AND    LIABILITIES    OF    BROKERS.  39 


SAME— RIGHT  TO  REIMBURSEMENT  AND  INDEMNITY. 

11.  A  broker  is  entitled  to  reimbursement  for  money  ex- 
pended on  his  principal's  account,  and  to  indemnity 
for  liabilities  incurred  in  the  execution  of  his  agency. 

A  j)riii(i|tal  is  not  j^ciKMally  liable  lor  his  broker's  exp('ns<*s.^""  It 
is  pirsunu'd  that  the  coiiimissioiis  paid  ^^  hen  the  broker  is  successful 
cover  all  expenses  incurred  by  him;  and,  when  not  successful,  the  loss 
is  on  the  broker,  he  having  taken  that  risk  by  making  his  compensation 
and  reimbursement  dependent  on  success.*""  It  has,  however,  been 
held  that  a  broker  would  be  entitled  to  recover  for  expenses  incurred 
by  him  when  the  principal  does  not  give  him  a  reasonable  time  to  per- 
form.*"* In  such  cases  the  expenditures  are  in  reality  on  the  broker's 
own  account,  not  that  of  his  j)rincipal.  When,  however,  a  broker  lays 
out  money  in  carrying  out  the  orders  of  his  principal,  as  when  he  buys 
property  or  pajs  insurance  premiums,  he  is  entitled  to  be  reimbursed 
for  such  sums.*"''  Ho.  when  a  broker  incurs  liabilities  in  his  principal's 
business,  the  latter  must  indemnify  him  against  loss  therefrom.*'" 

160  An  iusiuauce  broker  may  recover  of  the  assured  the  expense  of  the 
telegrams  relating  to  the  iusurance  sent  at  the  hitter's  request,  without  proof 
that  they  were  i-eceivert  by  the  parties  to  whom  they  were  sent.  Ward  v. 
Tucker,  7  Wash.  .399,  3.'>  Pac.  1086.  Where  one  employed  to  sell  mining  land, 
he  to  receive  all  over  a  certain  amount,  devotes  a  large  amount  of  time  there- 
to, and  performs  labor  and  inciu's  large  expenses  to  effect  it,  and  is  permitted 
to  do  so  for  a  period  of  years,  he  is  entitled  to  recover  on  a  quantum  meruit 
for  his  time,  labor,  and  expenses  if  his  authority  is  revoked.  .Jaekel  v.  Cald- 
well, 1.^.0  ra.  St.  260,  26  Atl.  1063. 

i«-  Charlton  v.  Wood,  11  Heisk.  (Tenn.)  19. 

!«'<  Hill  V.  Jones.  152  Ta.  St.  433,  25  Atl.  834.  And  see  Mcl-'arlaud,  J.,  in 
Charlton  v.  Wood,  11  Heisk.  (Tenn.)  19,  26. 

I'-f  Knapp  V.  Simon.  9(5  X.  Y.  284;    Searing  v.  Butler,  69  111.  .575. 

1-"  Maitland  v.  Martin,  86  Pa.  St.  120;  D'Arcy  v.  Lyle,  5  Bin.  (Pa.)  441; 
Stocking  V.  Sage.  1  Conn.  519;  Bennett  v.  Covington.  22  Fed.  816.  But  see 
Carpenter  v.  Momsen.  92  Wis.  449,  65  N.  W.  1027.  A  broker  employed  to 
negotiate  the  sale  of  tlour  at  a  certain  price,  who,  without  express  authority, 
makes  a  contract  for  the  sale  thereof  at  such  price  in  his  own  name,  cannot, 
on  his  principal's  refusal  to  deliver  at  the  price  named,  recover  from  the 
principal  damages  paid  by  him  to  the  purchaser  for  his  failure  to  perform 
the  contract  of  sale,     Haas  v.  Euston,  14  Ind.  Api).  8,  42  N.  E.  298. 


40  BRO  KICKS. 

SAME— RIGHT  TO  A  LIEN. 

12.  Insurance    brokers,    stock    brokers,     and    purchasing 

agents  have  general  liens. 

13.  A  loan  broker  has  a  lien  which  is  probably  particular. 

14.  Ship  brokers  and  real-estate  brokers  have  no  liens. 

Insurance  Brol'ers. 

Insuiauce  brokers  have  a  general  lien  for  their  coniuiissions  and  for 
premiums  paid  by  them,  on  the  policies  in  their  hands,^''  and  on  the 
moneys  received  under  such  policies  in  the  event  of  a  loss.^'^  If  the 
broker  delivers  the  policy  to  his  principal,  his  lien  is  gone.''^  But, 
if  it  should  come  into  his  hands  again,  the  lien  would  revive,'"*  unless 
the  manner  of  his  parting  with  the  policy  manifests  an  intention  to 
abandon  the  lien.'^'  A  subagent  of  the  broker  has  a  particular  lien 
on  a  policy  in  his  hands  for  his  expenditures  and  services  in  procur- 
ing that  policy,  but  not  as  against  the  insured,  for  a  general  balance 
due  him  from  his  principal,  the  broker.' ^^ 

Stock  Brokers. 

Stock  brokers  generally  stand  in  the  relation  of  pledgees"^  to  the 
principals,  rather  than  holding  a  lien.  When  a  broker  buys  stock  or 
bonds  for  his  principal,  and  advances  most  of  the  money  to  make  the 
purchase,  he  holds  the  stock  or  bonds  as  collateral  security,'"  and  has 

171  McKonzie  v.  Nevins,  22  Me.  138;  Cranston  v.  Tupuiaiuv  Co..  5  Bin. 
(Pa.)  538;    Moody  v.  Webster,  3  Pick.  (Mass.)  424. 

iT2Spiinj,'  V.  Insurance  Co.,  8  Wheat.  2()8;  McKouzie  v.  Novius,  22  Me. 
138. 

173  Crauston  v.  Insurance  Co.,  5  Bin.  (Pa.)  538. 

174  Moody  V.  Webster,  3  Pick.  (Mass.)  424. 

175  Spriuf,'  V.  Insurance  Co.,  8  Wheat.  2<;S;  Sharp  v.  Whiinih-.  1  P.osw.  (N. 
Y.)  557. 

170  McKenzie  v.  Nevins,  22  Me.  138;  Foster  v.  Iloyt,  2  .Ti.lins.  Cas.  (N.  Y.) 
:'.27;  Maanss  v.  Henderson,  1  East,  335;  Suook  v.  Davidsdu.  2  Camp.  218. 
The  rule  is  the  same  where  the  subagent  did  not  know  that  tlie  broker  wlio 
employed  him  was  himself  acting  as  an  agent.  Bank  of  Melrt)polis  v.  Now 
England  Bank,  1  How.  2:}-l;  Mann  v.  Forri'ster.  4  Camp.  GO;  Bal)one  v.  Wil- 
liams, 7  Term    R.  3(;0. 

liT  s.'f  post.  p.  52;   Hale,  Bailm.  &  Car.  12(1,  note  137. 

17K  linker  v.  Drake,  OU  N.  Y.  518;    Steuton  v.  Jerome,  54  N.  Y.  480;    Van- 


RIGHTS    AND    LIABILITIES    OF    BROKERS.  41 

power  to  sell  nUev  pioiier  notice.^^*  Slock  brokers  may,  liowovor, 
hold  a  lien,  strictly  speaking,  ou  the  property  of  their  principals  in 
their  hands.  Since,  as  ali-eady  seen,^^''  stock  brokers  are  in  reality 
factors,  they  have  the  same  power  to  sell  to  reimburse  themselves  that 
factors  have.^^^ 

JPurc/uislufj  Af/ents. 

Brokers  Mhose  business  is  to  make  purchases  for  their  principals 
have  a  general  lien  on  the  goods  in  their  hands  for  advances  and  com- 
missions.^82  g^-.j^  brokers  are  often  called  "purchasing  factors."  ^^'^ 
A  broker  who  is  intrusted  with  the  possession  of  goods  which  he  is  to 
sell  becomes,  by  reason  of  such  possession,  a  factor/ «*  and  so  has  a 
general  lien.^^^ 

Loan  Brokei's. 

A  loan  broker  has  been  held  to  have  a  lien  on  the  money  borrowed 
while  it  remains  in  his  hands,  for  his  commissions. ^s*'  The  courts,  how- 
ever, have  not  given  the  question  careful  consideration,  and  it  has  not 
been  determined  what  the  exact  nature  of  this  lien  is,  or  whether  it  is 
a  general  lien  or  a  particular  lien.  It  would  seem,  however,  that 
the  lien  is  a  particular  one,  since  general  liens  are  not  favored  by  the 
common  law.^^^  A  usage  of  business  in  the  market  where  the  parties 
were  dealing  would  be  sufficient  to  establish  a  general  lien.^ss 

pell  V.  Woodward,  2  Sandf.  Ch.  (N.  Y.)  143;  Thompson  v.  Tolaud,  48  Cal.  9l»: 
Worthiugton  v.  Tormey,  34  Md.  182;   Hatch  v.  Douglas,  48  Conn.  116. 

1-9  Hale,  Bailm.  &  Car.  16.5;  Browu  v.  Ward,  3  Duer  (N.  Y.)  6G0;  Wallace 
V.  Berdell,  24  Hun  (N.  Y.)  379;    Canlield  v.  Association,  14  Fed.  801.' 

180  See  ante,  p.  2. 

181 1  Jones,  Liens  (2d  Ed.)  §  421;   Monograph  on  Factors,  p.  37. 

is2BiTee  v.  Broks,  26  Wend.  (N.  Y.)  367;   Stevens  v.  Robins,  12  Mass.  180 

183  See  ante,  p.  2. 

184  See  ante,  p.  2. 

185  Monograph  on  Factors,  p.  30.  Circumstances  may  make  the  lien  of 
such  a  broker  a  particular  one.     Barry  v.  Boninger,  46  Md.  59. 

186  Vinton  v.  Baldwin,  95  Ind.  433.  Cf.  James'  Appeal,  89  Pa.  St.  51.  A 
broker  is  entitled  to  a  lien  for  commissions  on  a  note  and  mortgage  left  in 
his  possession  for  sale  on  commission.  Peterson  v.  Hall,  61  Minn  '^68  63 
N.  W.  733.  '         .  -     , 

'87  1  Jones,  Liens  (2d  Ed.)  §  19;'  Rushforth  v.  Hadfield,  7  East,  221. 
18S  Green  v.  Farmer,  4  Burrows,  2214,  2221. 


12  HlfOKKKS. 

Ship  lii-okcrs  liavc  no  lien  on  llic  slii])  ooncprninj;  wliidi  ilicy  n('jj:o- 
tiatc."'''  Thus,  a  broker  has  uo  lien  for  liis  services  in  jtrocnrin};  a 
t  harter  party. ^'**'  Nor  has  an  aj^enl  who  solicits  frei<;ht.^®^  Tlie 
tpiestiou  of  a  ship  broker's  lien  on  ])ai)ers  in  liis  hands  has  not  been 
raised  in  any  case  which  has  come  to  the  Avriter's  notice. 

Rail- Est  a  tr  Brohr^. 

It  is  probable  that  a  real-estate  broker  has  no  lien  on  deeds,  plats, 
etc.,  in  his  hands  for  his  commissions  and  expenses.^ "^  In  Richards 
V,  Gaskill  '^^^  it  was  held  that  such  a  lien  existed  for  "work  thereon, 
and  for  their  connnissions  and  advances."  The  case,  however,  is  not 
well  considered.  Scriveners  and  conveyancers  have  a  particular  lien 
on  papers  in  their  hands  for  work  done  on  such  papers,^®*  but  such 
services  are  not  performed  as  real-estate  brokers.  A  lien,  in  Rich- 
ards V.  Gaskill,  was  properly  given  for  work  in  drawing  the  deed. 

ISO  The  Thames,  10  Fed.  848;  The  Crystal  Stream.  25  Fed.  575:  The  .T.  C. 
Williams,  15  Ped.  .558.  Aud  see  The  Faola  R.,  32  Fed.  174;  Ferris  v.  The 
E.  D.  Jewett,  2  Fed.  111. 

190  The  Thames,  10  Fed.  848. 

lei  The  Crystal  Stream,  25  Fed.  575.  Aud  see  The  .T.  C.  Williams.  15  Fed. 
558. 

i»2  Arthur  v.  Sylvester,  105  Pa.  St.  2X5.  In  Gresham  v.  Galvestou  Co. 
(Tex.  Civ.  App.)  36  S.  W.  796,  it  was  held  that  a  broker  had  a  lien  for  his 
commission  upon  the  notes  given  for  deferred  payments,  entitling  him  to  the 
possession  of  the  notes  for  the  purpose  of  collection.  A  real-estate  broker 
has  no  lien  for  services  on  a  certificate  of  deposit  placed  in  his  hands  by  his 
principal,  to  be  used,  conditionally,  in  purchasing  land.  Robinson  v.  Stewart, 
97  Mich.  4,54.  5<J  N.  W.  85.3. 

i«3  .SD  Kan.  428.  18  Pac.  494. 

i9<  Ilollis  V.  Claridge,  4  Taunt.  S07;  Steadman  v.  Hockley,  15  Mees.  & 
W.  .553.  A  real-estate  broker,  who  is  not  an  attorney  at  law,  cannot  claim 
a  general  lien  on  all  securities  in  his  possession  for  expenses  incurred  in  man- 
aging some  of  such  securities,  but  the  lien  is  conlined  to  the  specific  securi- 
ties for  which  the  expenses  were  incurred.  CaiT>enter  v.  Momsen,  92  Wis. 
449.  65  N.  W.  1027. 


IIIGHI.S    AND    LlAIUMTllCS    OF    HUOKERS.  43 

SAME— RIGHTS  AGAINST  AND  LIABILITIES  TO  THIRD  PER- 
SONS. 

15.  Against  third  persons,  a  broker  has  the  usual  rights  of 
any  agent. 

RighU  against  Third  Persons. 

Brokers  usually  make  their  contracts  in  the  name  of  their  princi- 
]>als.  But  a  broker  may  contract  in  his  own  name  as  apparent  prin- 
cipal, or  for  a  princi})al  who  is  not  disclosed.  In  any  case  the  broker's 
rights  against  the  person  with  Avhom  the  contract  is  made  present 
no  points  calling  for  particular  attention.  The  rules  are  the  same 
as  for  agents  in  general. ^''^  So,  in  those  cases  where  a  broker  has 
j)Ossession  of  his  principal's  goods,  he  has  the  usual  rights  of  action 
against  third  persons  who  interfere  with  his  possession.^*® 

Liabilities  to  Third  Persons. 

Brokers  who  make  contracts  for  principals  whom  they  disclose  are 
not  liable  thereon  peisonally.^®'  They  are  liable  when  they  do  not 
disclose  Iheir  principals.^'-*^  A  broker  selling  property  in  his  pos- 
session, with  a  warranty,  is  liable  for  a  breach  of  the  warranty  when 
he  does  not  disclose  the  existence  of  his  agency,^*"  but  not  when  he 
does.2«o 

The  liability  of  a  broker  for  conversion  by  dealing  with  the  goods 
of  a  third  person  in  ignorance  of  the  true  owner's  rights  is  unsettled. 

las  See  Meohein,  Ag.  c.  15.  In  Farrow  v.  Insurance  Ck).,  18  Pick.  (Mass.) 
53.  it  was  held  that  either  the  principal  or  the  broker  could  sue  on  a  policy 
of  insurance  made  payable  to  the  broker. 

10  6  See  Monograph  on  Factors,  p.  38. 

197  Wright  V.  Cabot,  89  N.  Y.  570;  Cabot  Bank  v.  Morton,  4  Gray  (Mass.) 
1.".8;  McGraw  v.  Godfrey,  14  Abb.  Prac.  X.  S.  (N.  Y.)  397;  Knapp  v.  Simon, 
!K;  N.  Y.  284. 

iitf^  Wright  V.  Cabot.  S!)  N.  Y.  570:  Knapp  v.  Simon,  96  N.  Y.  284;  Beebe 
V.  Robert.  12  Wend.  (N.  Y.)  418;  C()l)b  v.  Knapp,  71  N.  Y.  348.  A  broker 
purchasing  in  his  own  name  is  liable  to  the  carrier  transporting  the  goods 
for  demurrage.     Falkenburg  v.  Clark,  11  R.  I.  278. 

199  Merriam  v.  Wolcott,  3  Allen  (Mass.)  2.58;  Wilder  v.  Cowles,  100  Mass. 
487;  Thompson  v,  McCullough,  31  Mo.  224;  Aldrich  v.  Jackson.  5  R.  I.  218; 
Dumont  v.  Williamson,  18  Ohio  St.  515;   Sere  v.  Faures,  15  La.  Ann.  189. 

200  Morrison  v.  Currie,  4  Dner  (N.  Y.)  79.  He  may  bind  himself  person- 
ally by  a  contract  to  do  so.     Wilder  v.  Cowles,  100  :Mass.  487. 


14  BROKERS. 

It  seems  to  be  conceded  that  a  brokei'  wlio  has  no  possession  of  (lie 
goods,  but  merely  sells  or  buys  them  for  his  principal,  is  not  liable  for 
conversion.-"^  But,  when  the  broker  has  possession  of  the  property 
at  any  time,  the  cases  are  unsatisfactory  and  scarce.-"- 

EIGHTS    AND    LIABILITIES    OF    PRINCIPALS    AND     THIRD 

PERSONS. 

16.  Principals,  ■whether  disclosed  or  not,  may  maintain  ac- 
tions on  the  contracts  made  for  them  by  their  bro- 
kers. They  are  liable  to  third  persons  on  contracts 
made  by  their  brokers  -within  their  authority. 

PrincipaVs  Rights  against  Third  Persons. 

The  principal  may  sue  third  persons  with  whom  his  broker  makes 
contracts  for  him.  He  may  do  this  whether  the  broker,  at  the  time 
of  making  the  contracts,  disclosed  the  name  of  the  principal  or  not.^*^^ 
When  the  broker  selling  property  does  not  have  possession,  the  pur- 
chaser, when  sued  by  the  principal,  cannot  set  off  claims  against  the 
broker.-"*  For  injuries  to  his  property  in  the  hands  of  his  broker,  a 
principal  has  the  usual  rights  of  a  general  owner. ^"^ 

Liahiliti^  of  Principal  to  Third  Pei'sons. 

Third  persons  contracting  through  a  broker  can  sue  his  principal 
on  such  contracts.-""  When  the  broker  exceeds  his  authority,  the 
principal  is  not  bound. ^"'^  A  broker  not  having  possession  of  his 
principal's  goods  cannot  bind  the  latter  by  contracts  made  according 
to  the  usages  of  trade  and  of  the  market  in  which  he  is  dealing.-"* 

201  Fowler  v.  Hollins,  L.  R.  7  Q.  B.  Glt>. 

202  Williams  v.  Merle,  11  Wend.  (N.  Y.)  80;  Fowler  v.  Hollins,  L.  K.  7  Q. 
B.  GIG.     And  see  Monograph  on  Factors,  p.  40. 

203  Graham  v.  Duckwall,  8  Bush  (Ky.)  12;   Mechem,  Ag.  §  7GS  at  seq. 

204  Bradon  v.  Insurance  Co.,  1  La.  220. 

205  Mechem,  Ag.  §  792. 

206  Mechem,  Ag.  §§  G95,  703. 

207  Clark  V.  Gumming,  77  Ga.  64;  Clark  v.  Smith.  SS  111.  298;  Saladin  v. 
Mitcliell,  4~j  111.  83;  Brown  v.  Morris,  83  N.  C.  254;  Kornemanu  v.  Monaghan, 
24  .Mich.  :W.     But  see  Wliildeu  v.  Bank,  t>l  Ala.  1. 

-"»*  Seiple  V.  Irwin,  30  Pa.  St.  514;  Crosby  v.  Hill,  .39  Ohio  St.  100;  Higgins 
V.  ^foore,  34  N.  Y.  417;  Roseustock  v.  Tormey,  32  Md.  1G9;  Borries  v.  Bank, 
L.  K.  9  C.  P.  38. 


TKHMINATION    OK    KKLATION,  45 

lu  tliis  respect  there  is  a  ditlereiice  between  brokers  and  factors.^"* 
When  the  broker  has  possession,  his  contracts  within  the  scope  of  his 
implied  powers  -^^  are  binding  on  the  principal.^^^ 

TERMINATION  OF  RELATION. 

17.  The  relation  of  principal  and  broker  may  be  terminat- 
ed 

(a)  By  expiration  of  the  time  for  which  the  agency  was 

created. 

(b)  By  agreement  of  the  parties. 

(c;  By  notice  by  either  party  after  a  reasonable  time,  un- 
less created  for  a  definite  time. 
(d)  By  death  of  either  party. 

If  a  principal  and  broker,  at  the  time  the  relation  is  established, 
agree  that  the  relation  shall  continue  for  a  definite  time,  when  that  time 
has  expired  the  broker's  authority  will  be  at  an  end,  and  the  relation 
terminated.^ ^^  The  parties  may  terminate  the  relation  at  any  time 
by  mutual  agreement,  whether  created  for  a  definite  or  an  indefinite 
time.  If  the  agency  was  established  for  a  definite  time,  neither  party 
could  put  an  end  to  the  agency  without  the  consent  of  the  other."^ 
But,  when  no  time  for  the  continuance  of  the  contract  is  fixed  by  its 
terms,  either  party  is  at  liberty  to  terminate  it  at  will,  subject  only  to 
the  ordinary  requirements  of  good  faith.^^*     The  contract  of  the  par- 

2  09  Monograph  on  Factors,  p.  43;    Barings  v.  Corrie,  2  Barn.  &  Aid.  138. 

210  Ante,  p.  7. 

211  Tborne  v.  Bank,  37  Ohio  St.  254;  Lobdell  v.  Baker,  1  Mete.  (Mass.)  193; 
Borries  v.  Bank,  L.  R.  9  C.  P.  38. 

212  A  broker's  aiithority  may  be  terminated  by  performance  of  his  under- 
taking. Walker  v.  Derby,  5  Biss.  134,  Fed.  Cas.  No.  17,068.  The  destruction 
of  a  house  by  fire  is  a  revocation  of  a  broker's  authority  to  sell,  and  a  sub- 
sequent sale  of  the  lot  by  the  owner  to  a  purchaser  to  whom  the  broker  had 
attempted  to  sell  before  the  fire  does  not  entitle  the  broker  to  commissions. 
Cox  V.  Bowling,  54  Mo.  App.  289. 

213  Brown  v.  Pforr,  38  Cal.  550.  An  agreement  to  pay  a  broker  a  com- 
mission if  he  sells  land  within  a  month  is  not  necessarily  an  agreement  not 
to  revoke  the  agency  during  the  month.     Brown  v.  Pforr,  Id. 

214  Sibbald  v.  Iron  Co.,  S3  N.  Y.  378;  Satterthwaite  v.  Vreeland,  3  Hun 
(N.  Y.)  1.52;  Brown  v.  Pforr,  38  Cal.  550;  Doonan  v.  Ives,  73  Ga.  295;  Wilson 
V.  Dyer,  12  Ind.  App.  320,  39  N.  E.  103;   Neal  v.  Lehman,  11  Tex.  Civ.  App. 


\  B  BROKERS. 

tics  may,  liowovcr,  willionl  an  oxpicss  siipnlation,  ro(|uit'(>  the  con- 
tinuance of  the  relation  for  a  reaisonablc  linic.  ^Vlicrc  I  lie  ]K'ifoiiii- 
ance  of  the  broker'!?  nndertakinji  necessarily  involves  expendilnres. 
the  broker  is  entitled  to  a  fair  and  reasonable  ojiportnnity  to  [K-rforni 
liis  oblijiation,  snbject,  of  course,  to  Ihe  ri^ht  of  the  seller  to  sell 
inde[K'ndently.  But,  that  liavin}>-  been  j^ranted  him,  the  right  of  the 
principal  to  terminate  his  authority  is  absolute  and  unrestricted,  ex- 
cept only  that  he  may  not  do  it  in  bad  faith,  and  as  a  mere  devic(> 
to  escape  the  payment  of  the  broker's  commissions.  Thus,  if,  in  the 
midst  of  negotialions  instituted  by  the  broker,  and  which  were  plainly 
and  evidently  approaching  success,  the  seller  should  revoke  the  author- 
ity of  the  broker,  with  the  view  of  concluding  the  bargain  without  his 
aid,  and  avoiding  the  payment  of  commissions  about  to  be  earned,  it 
might  well  be  said  that  the  due  performance  of  his  obligation  by 
the  broker  was  purposely  prevented  by  the  piincipal.  But  if  the 
latter  acts  in  good  faith,  not  seeking  to  escape  the  payment  of  com- 
missions, but  moved  fairly  by  a  view  of  his  own  interest,  he  has  the 
absolute  right  before  a  bargain  is  made,  while  negotiations  remain  un- 
successful, before  commissions  are  earned,  to  revoke  the  broker's  au- 
thority; and  the  latter  cannot  thereafter  claim  compensation  for  a 
sale  made  by  the  principal,  even  though  it  be  to  a  custonuu'  with  whom 
Ihe  broker  unsuccessfully  negotiated,  and  even  though,  to  some  extent, 
the  seller  might  justly  be  said  to  have  availed  himself  of  the  fruits  of 
the  broker's  labor.^^" 

4<;l,  34  S.  W.  153;  Farmer  v.  Kobiusou,  2  Oaiiip.  ;K9,  uote.  Where  a  roal- 
estate  broker  for  several  months  talios  no  steps  to  find  a  purchaser,  the  owner 
is  justitied  in  treating  his  conduct  as  an  abandonment  of  all  effort  to  sell  the 
property.  Singer  &  Taleott  Stone  Co.  v.  Hutchinson,  01  111.  App.  30S.  ("f. 
Vincent  v.  Oil  Co.,  1<>5  Pa.  St.  40-J.  :'.o  Atl.  <.«»l.  The  broker  must  be  given 
notice  of  the  revocation  of  his  autiioiity.  Lnmson  v.  Sims.  48  N.  Y.  Super. 
Ct.  281;  Hash  v.  Hill,  (52  111.  21().  One  who  has  given  a  broker  authority, 
until  further  notice,  to  sell  land.  h;is  the  burden  to  show  that  he  revoked  tin- 
authority  before  the  broker  found  a  purchaser.  Bourke  v.  Van  Keureu,  20 
Colo.  !J."..  3«  Pac.  882. 

2ioSii»l)ald  V.  Iron  Co.,  S:\  X.  Y.  378;  Kelly  v.  Marsliali.  172  Pa.  St.  :'.'.•(;. 
33  Atl.  090.  A  contract  of  agency  to  sell  lots,  stipulating  for  additional  pay 
to  the  agent  should  he  sell  them  all  in  one  year,  gives  him  one  year  to  sell 
them;  and,  though  not  engaging  his  whole  time,  it  cannot  be  revoked  by  tlie 
principal  so  long  as  the  agent  is  diligent  in  his  business,  (jlover  v.  ileiider- 
sou,  120  Mo.  307,  25  S.  \V.  175. 


MERCHANDISE    BROKERS.  47 

So.  wiieii  a  stock  broker  undertakes  a  transaction  for  a  client  which 
involves  a  carrying  of  stock  by  the  broker,  there  is  an  implied  agree- 
ment to  continue  the  relation  a  reasonal)le  time,  provided  tlie  ])rin- 
cipal  complies  with  his  part  of  the  contract.-^"  If  the  principal  does 
not  keep  up  the  margins  agreed  upon,  the  broker  may,  after  proper 
notice,  sell  the  stoclc.^^^ 

The  deatli  of  either  the  principal  or  the  broker  [luts  an  end  to  the 
hitter's  authoritv.-^* 


MERCHANDISE  BROKERS. 

18.  Merchandise  brokers  negotiate   the  purchase  and   sale 
of  goods  without  having  possession. 

Merchandise  brokers  are  most  nearly  allied  to  factors.  They  differ 
from  them  as  selling  agents  principally  in  not  having  the  possession 
of  the  goods  sold.  When  a  broker  for  the  sale  of  goods  is  intrusted 
with  possession,  he  becomes  a  factor. ^^^  The  differences  in  the  im- 
plied powers  of  a  merchandise  broker  ^^"  and  a  factor  arise  from 
the  possession  of  the  goods.  The  powers  of  a  broker  employed  to  pur- 
chase goods  depend  on  the  authority  given  him.  If  he  departs  from 
his  instructions,  his  principal  is  not  bound.     Such  a  broker  has  im- 

216  White  V.  Smith.  54  N.  Y.  .522;  Rogers  v.  Wiley.  131  N.  Y.  527.  3U  N.  E. 
582;    Hess  v.  Kau.  95  N.  Y.  339. 

-17  Stentoii  V.  Jerome,  54  X.  Y.  4S0;  Allen  v.  Mcronilie.  124  N.  Y.  342.  2t; 
N.  E.  812;    Roseustock  v.  Toniiey,  32  :Md.  I(i9. 

218  Boone  v.  Clarke,  3  Cranch,  C.  C.  389,  Fed.  Cas.  No.  1,G41;  Hunt  v. 
Rousmanier's  Adm'r,  8  Wheat.  174;  Lincoln  v.  Emerson,  108  Mass.  87;  Adri- 
auoe  V.  Rutherford,  57  Mich.  170,  23  N.  W.  718;  Merrick's  Estate,  8  Watts 
&  S.  (Pa.)  402;  Hartford  Fire  Ins.  Co.  v.  Wilcox,  57  111.  180.  But  the  death 
of  the  principal  does  not  revoke  the  broker's  authority  where  it  is  coupled 
with  an  interest,  as  where  a  stock  broker  is  carrying  stock  on  margins. 
Hunt  v.  Rousmanier's  Adm'r.  supra;   Hess  v.  Rau.  95  N.  Y.  359. 

219  Ante,  p.  41.     Cf.     Bragg  v.  Meyer.  1  McAU.  408.  Fed.  Cas.  No.  1.801. 

220  The  implied  powers  of  merchandise  brokers  selling  goods  were  con- 
sidered in  treating  of  the  implied  powers  of  brokers  generally.  Ante,  p.*  7. 
Such  a  broker  has  no  implied  power  to  rescind  a  sale  which  he  has  made. 
Saladin  v.  Mitchell.  45  111.  79;  nor  to  receive  payment,  Higgins  v.  Moore.  34 
N.  Y.  417;  Western  R.  Co.  v.  Roberts.  4  Phila.  (Pa.)  110.  For  their  right 
to  commissions,  see  Moses  v.  Bierliug,  31  N.  Y.  402. 


48  BROKERS. 

jtlied  j)(>AV(>r.  in  the  nbsciico  of  iiisii  iiciioiis  on  tlic  point,  lo  fix  the 
])nio  at  which  the  i)iirchas('  sliall  bo  niade.'--'^  The  power  of  mer- 
chandise brokers  to  bind  both  parties  to  the  contract  by  the  execu- 
tion of  bong:ht  and  sokl  notes  has  ah'eady  been  considered.-'--  Tliere 
are  varions  special  kinds  of  merchandise  brokers,  who  take  their 
names  from  the  articles  in  wliich  tliey  deal.  Thus,  we  have  jjjrain 
brokers,  produce  brokers,  sugar  brokers,  etc.  Their  rights  and  powers 
differ  only  as  the  customs  and  usages  in  their  several  kinds  of  business 
differ. 

REAL-ESTATE  BROKERS. 

19.  Real-estate  brokers  negotiate  the  purchase,  sale,  and 
leasing  of  real  property. 

Most  of  the  cases  touching  real-estate  brokers  are  on  the  question 
of  their  right  to  compensation.  This  has  already  been  considered.^-* 
^fost  cases  hold  that  a  real-estate  broker  who  is  given  authority  to  sell 
on  terms  definitely  fixed  by  the  principal  may  bind  the  latter  by  sign- 
ing a  written  contract  to  sell,^-*  though,  of  course,  the  broker  cannot 
convey  without  a  power  of  attorney;  ^-^  and  a  few  cases  have  held  that 
he  has  no  authority  to  bind  the  principal  by  a  contract  to  convey.^ ^" 

Real-estate  brokers  in  many  instances  combine,  with  the  business  of 
selling  real  property,  the  care,  management,  and  renting  of  such 

2  21  Ante,  p.  9. 
22  2  Ante,  p.  10. 
2  23  Ante,  p.  20. 

224  Smith  V.  Armstrong.  24  Wis.  44€;  Pringlc  v.  Spanlding.  ."la  Barb.  (N. 
Y.)  17;  Glentwortli  v.  Lutlier,  21  Barb.  (N.  Y.)  145;  Force  v.  Dutcher.  IS  N. 
.f.  Kq.  401;  Smith  v.  Allen,  SO  Mo.  178.  But  see  Ilaydock  v.  Stow,  40  N.  Y. 
;{G3;    Roach  v.  Coe,  1  E.  D.  Smith  (N.  Y.)  17."). 

225  Glentworth  v.  Luther,  21  Barb.  (N.  Y.)  145;  Force  v.  Dutcher,  18  N.  J. 
Eq.  401.     Cf.  Blood  v.  Goodrich,  12  Wend.  (N.  Y.)  525. 

2::')  Duffy  V.  Hobson,  40  Gal.  240;  Rutenberg  v.  Main,  47  Cal.  213;  Mor- 
ris V.  Ruddy,  20  N.  J.  Eq.  236;  Keim  v.  Lindley  (N.  .T.  Eq.)  30  Atl.  10G3;  Cole- 
man V.  Garrigues,  18  Barb.  (N.  Y.)  60  (oven-uled  Haydock  v.  Stow,  40  N.  Y. 
.■!i;:{);  Mannix  v.  Ilildreth,  2  App.  D.  C.  2r)0.  Where  the  terms  of  the  sale 
are  to  be  submitted  to  the  principal,  the  broker  has  no  authority  to  bind  him 
by  contract.  Furst  v.  Tweed,  1)3  Iowa,  300,  61  N.  W.  S57;  Berry  v.  Tweed, 
l>.".  Iowa,  206,  01  N.  W.  858.  But  see  Smith  v.  Kcelor,  101  UI.  518,  38  N.  B. 
2.J0. 


HILL    AND    NOTK    BROKERS.  49 

properly.  Uu\  siicli  ;iii  ;ij;<'ii(,  lli()iij;li  lie  lias  power  to  iiial^e  ordinary 
repairs,  has  no  implied  power  to  rebuild  in  case  the  buildings  are  de- 
stroyed by  fire."^  An  ajjent  for  the  care  of  property  has  been  held 
to  have  no  authority  to  l»iiii<;  suit  in  his  own  name,  for  the  recovery 
of  possession  of  the  property  from  one  claiming  under  a  tax  title.--* 

BILL  AND  NOTE  BROKERS. 

20.  Bill  and  note  brokers  negotiate  the  purchase  and  sale 
of  commercial  paper. 

Brokers  who  negotiate  the  purchase  and  sale  of  foreign  bills  of 
exchange  are  called  "exchange  brokers'';--**  and  so  sometimes  when 
they  negotiate  bills  drawn  on  other  places  in  this  country,-^"  When 
a  bill  or  note  broker  acts  in  his  own  name,  he  is  liable  if  the  paper 
he  sells  proves  not  to  be  genuine.- ^^  The  same  is  true  when  he  does 
not  disclose  the  name  of  his  principal,  though  the  purchaser  knows 
he  is  dealing  with  an  agent.^^-  It  has  been  held,  however,  that, 
when  he  has  sold  such  pajjer,  he  will  not  be  liable  if  he  has  paid  over 
the  proceeds  to  his  principal.^^^  Tlie  broker  is  not  liable  when  he 
discloses  the  name  of  his  principal,  though  the  signatures  of  some 
of  the  parties  are  forged. ^^*  There  is  no  implied  warranty  of  the 
solvency  of  any  of  the  parties  to  paper  sold  by  a  broker,  whether  his 
principal  is  disclosed  or  not.-^"'  A  principal  selling  a  note  through  a 
broker  can  reclaim  the  proceeds  in  the  hands  of  the  broker  as  long 
as  they  can  be  identified.-^*'     A  principal  has  been  held  bound  by  rep- 

227  Becknian  v.  Wilson.  01  Cal.  .33.j. 

228  McIIenry  v.  Painter.  58  Iowa.  ;;(;.">.  12  N.  AV.  338. 

229  Black,  Law  Diet.  tit.  -Broker." 
2  30  Bouv.  Law  Diet.  tit.  "Brokers." 

231  Merriam  v.  Wolcott.  3  Allen  (Mass.)  258;  Worthington  v.  Cowles.  112 
Mass.  30:  Thompson  v.  McCnllougli.  31  Mo.  224;  Lyons  v.  Miller.  6  Grat. 
(Va.)  427:    Aldrith  v.  .Tackson.  5  R.  I.  218:   Bell  v.  Calferty,  21  lud.  411. 

232  Morrison  v.  Currie.  4  Duer  (N.  Y.)  79. 

233  Morrison  v.  Currie.  4  Duer  (N.  Y.)  79. 

234  Worthington  v.  Cowles.  112  Mass.  30:  Lyons  v.  Miller.  6  Grat.  (Va.) 
427;  Merriam  v.  Wolcott,  3  Allen  (Mass.)  258;  Thompson  v.  McCullough,  31 
Mo.  224. 

235  Aldrich  v.  Jackson.  .".  R.  I.  218. 

236  Clark  V.  Bank,  1  Sandf.  (N.  Y.)  498. 

BROKERS 4 


50  BROKliRS. 

iH'sciifntions  inndf  l),v  liis  ln'olvi  r  llmi  I  lie  iiolc  ho  \v;i>;  soUlnj;  was  not 
usurious,-' '•  and  thai  the  inhitiiial  was  bound  llicrcon  as  jiuaranlor.-'"' 
A  lull  broker  haviiijj:  possession  of  [lapci-  whii-h  he  sells  has  implied 
power  lo  receive  pavuieut.-^* 

LOAN  BROKERS. 

21.  Loan  brokers  negotiate  the  lending  of  money. 

"VNTiat  coustitutes  performance  of  the  undertaking;  of  a  loan  broker 
has  already  been  considered.^*"  A  broker  empowered  to  borrow 
money  has  implied  authority  to  give  to  the  lender  the  ordinary  securi- 
ties  therefor.'""^  An  agent  employed  to  loan  money  for  the  principal 
has.  by  implication,  no  power  to  loan  it  at  an  illegal  rale.  If  the 
agent  takes  more  than  the  legal  late.  the  principal  will  not  be  af- 
fected.^*'- In  some  states  the  amount  of  commission  which  a  broker 
may  charge  for  procuring  a  loan  is  limited  by  statute.^" 

It  has  already  been  stated  that  pawnbrokers  loaning  their  own 
money  are  not  brokers  at  all,  but  are  principals.^** 

STOCK  BROKERS. 

22.  Stock  brokers  negotiate  the  purchase  and  sale  of  cor- 

porate stocks  and  bonds  and  government  securities. 

As  already  stated,-*^  stock  brokers,  when  selling  stocks  or  bonds, 
are  very  much  like  factors,  since  thej^  usuallj'  have  possession  of  the 
property  in  which  they  deal.     The  business  of  stock  brokers  is  very 

237  Ahern  v.  Goodspeed,  72  N.  Y.  108. 

238  Fivvall  V.  Fitcli,  5  Whart.  (Pa.)  32."). 

239  Lentilhoii  v.  Vorwerck,  Hill  &  1).  (N.  Y.)  443. 
2*0  Aute,  p.  27. 

2*1  Hatch  V.  Coddlngtou,  05  U.  S.  48.  ^^'il(M•(>  a  loan  broker  is  applied  to 
for  a  loan,  he  ha.s  implied  authority  to  asi'ee  with  liie  propo.^H'd  louder  that 
'full  ])rlef  of  title  and  searches,  with  opinion  of  counsel,  will  be  required." 
Middleton  v.  Thompson,  im  I'a.  St.  112,  29  All.  7!m;. 

2*2  f Jokey  V.  Knapp,  44  Iowa,  32. 

2*3  Revision  N.  J.  p.  519,  §  5;    Broad  v.  Hoftmau,  G  Barb.  ^N.  Y.)  177. 

2*«  Ante,  p.  2. 

2*5  Ante,  p.  13. 


STOCK    BROKKRS.  f)! 

huiio]y  ^ov(Mned  bj  the  rules  and  usages  of  the  slock  exchange.     The 
jiarties  may,  of  conise,  govern  (lioir  rights  by  any  special  contracts 
they  see  fit  to  make.2^«     If  no  such  agreement  is  made,  the  relation  of 
the  parlies,  when  a  customer  orders  his  broker  to  buy  stock  in  the 
expectation  of  a  rise  in  the  market,  has  been  well  stated  by  Hunt,  C.  J., 
in  .Markham  v.  Jaudon,-^"  as  follows:  "The  customer,  Mr.  M.,  employs 
the  broker,  Mr.  J.,  to  buy  certain  railroad  stocks  for  his  account, 
and  to  pay  for  them,  and  to  hold  them  sui)ject  to  his  order  as  to  the 
time  of  sale.     The  customer  advances  ten  per  cent,  of  their  market 
value,  and  agre(^s  to  keep  good  such  proportionate  advance  according 
to  the  fluctuations  of  the  market.     Waiving  for  the  moment  all  dis- 
puted questions,  I  state  the  following  as  the  result  of  this  agree- 
ment:    The  broker  undertakes  and  agrees  (1)  at  once  to  buy  for  the 
customer  the  stocks  indicated;   (2)  to  advance  all  the  money  required 
for  the  purchase,  beyond  the  ten  per  cent,  furnished  by  the  customer; 
(3)  to  carry  or  hold  such  stocks  for  the  benefit  of  the  customer  so 
long  as  the  margin  of  ten  per  cent,  is  kept  good,  or  until  notice  is 
given  by  either  party  that  the  transaction  must  be  closed;   an  appre- 
ciation in  the  value  of  the  stocks  is  the  gain  of  tlie  customer,  and  not 
of  the  broker;  (4)  at  all  times  to  have  in  his  name  or  under  his  control, 
ready  for  delivery,  the  shares  purchased,  or  an  equal  amount  of  other 
shares  of  the  same  stock;   (5)  to  deliver  such  shares  to  the  customer 
when  required  by  him,  upon  the  receipt  of  the  advances  and  commis- 
sions accruing  to  the  broker;  or  (6)  to  sell  such  shares  upon  the  order 
of  the  customer,  upon  payment  of  the  like  sums  to  him,  and  account 
to  the  customer  for  the  proceeds  of  such  sale.     Under  this  contract, 
the  customer  undertakes  (1)  to  pay  a  margin  of  ten  per  cent,  on  the 
current  market  value  of  the  sluires;    (2)  to  keep  good  such  margin, 
according  to  the  fluctuations  of  the  market;  ^^^  (3)  to  take  the  shares 
so  purchased  on  his  order,  whenever  required  by  the  broker,  and  to 
pay  the  difference  between  the  percentage  advanced  by  him  and  the 

2*c  Robinson  v.  Norris,  6  Hun  (N.  Y.)  233;    Baker  v.  Drake,  0(5  \    Y    518- 
Hyatt  V.  Argeuti.  3  Cal.  151. 

2*T  41  X,  Y.  235,  239. 

2^8  If  he  fails  to  do  so,  the  broker  may,  after  proper  notice,  sell  the  stock 
to  protect  himself.  Baker  v.  Drake,  (56  X.  Y.  518;  Gruman  v.  Smith  SI  X 
Y.  25;  (Jillett  v.  Whiting,  120  X.  Y.  402,  24  x\.  E.  790;  Esser  v.  Linderman 
71  Pa.  St.  76. 


52  BROKERS. 

niuount  ]);ii(l  tliciefoi'  by  tli«^  brolcci.-'^  Tlic  jjosilioii  of  jlic  bi'okcr 
is  twofold.  T'[»oii  the  Older  of  the  customei',  he  piirchascs  thi'  shares 
of  stocks  desired  by  him.  This  is  a  clear  act  of  agency.  To  complete 
the  purchase,  he  advances  from  his  own  funds,  for  the  benefit  of  the 
customer,  ninety  per  cent,  of  the  ])ui'chase  money.''  In  uiakin*»'  these 
advances,  the  broker  assumes  a  new  relation  to  the  client;  he  becomes 
a  creditor  of  the  client,  and  holds  the  stock  as  a  pledgee.-^*' 

When  the  customer  desires  to  speculate  on  his  judgment  that  the 
market  will  fall,  he  orders  his  broker  to  sell  stocks  or  bonds  vihi(;h  the 
principal  does  not  own.  Tlie  broker  executes  the  order  by  borrowing 
the  stock  of  some  other  broker  for  delivery  to  the  piu-chaser.  When 
the  transaction  is  to  be  closed,  the  broker  buys  in  stock  on  the  market 
to  replace  that  borrowed.  An  operation  of  this  kind  is  called  "sell- 
ing short."  ^^^  The  broker  is.  of  course,  bound  to  follow  the  instruc- 
tions of  his  principal  in  the  execution  of  all  orders  for  buying  or  sell- 
ing.    If  he  fails  to  do  so.  he  is  liable  to  his  principal  for  the  resulting 

249  A  broker  who  advanced  margins  for  the  purchase  of  stocks  for  his 
chent  could  not  recover  the  amount  thereof  before  calling  upon  his  client  to 
take  up  the  stock.  MuUer  v.  Legendre,  47  La.  Ann.  1017.  17  South.  500.  A 
broker  is  not  entitled  to  recover  from  his  principal  differences  on  stock  which 
he  purports  to  carry  over  on  his  behalf,  when  there  is  no  existing  contract 
between  such  broker  and  any  third  party  available  for  the  principal  at  the 
time  when  such  differences  arise.  Skelton  v.  Wood,  15  Reports,  130.  Stock 
ordered  of  a  broker  on  margin  contracts  belongs,  not  to  tlie  broker,  but  to 
customers,  and  may  be  redeemed  by  them  from  an  assignee  of  the  broker 
for  the  benefit  of  creditors.     Skiff  v.  Stoddard.  Go  Conn.  li)8,  26  Atl.  874. 

250  Markham  v.  Jaudon.  41  N.  Y.  235;  Baker  v.  Drake,  53  N.  Y.  211,  6G 
N.  Y.  518;  Stenton  v.  Jerome,  54  N.  Y.  480;  Gruman  v.  Smith,  81  N.  Y.  25; 
Taussig  V.  Hart,  58  N.  Y.  425;  Gilpin  v.  Howell,  5  Pa.  St.  41;  Child  v.  Hugg, 
41  Cal.  511);  Thompson  v.  Toland,  48  Cal.  90;  Maryland  Firo  Ins.  Co.  v. 
Dalrymple,  25  Md.  243.  For  a  discussion  of  the  riglits  and  liabilities  of  a 
stock  broker  so  far  as  he  is  a  pledgee,  see  Ilale,  Bailm.  &  Carr.  c.  4.  A 
broker  is  not  bound  to  retain  the  identical  certiticatc^s  of  stock,  since  one  share 
is  the  exact  equivalent  of  any  other.  It  is  sufficient  if  he  always  has  on 
hand  stock  enough  to  fill  his  contract.  Caswell  v.  Putnam.  120  N.  Y.  153, 
24  N.  E.  287;  Taussig  v.  Hart,  supra;  Levy  v.  Loeb,  85  X.  Y.  305;  Atkins  v. 
Gamble,  42  Cal.  8G;    Hale,  Bailm.  &  Carr.  15!). 

251  Knowlton  v.  Fitch,  52  N.  Y.  288;  White  v.  Smith,  54  N.  Y.  522;  Rogers 
V.  Wiley,  131  N.  Y.  527,  30  N.  E.  582;  Hess  v.  Rau,  95  N.  Y.  359;  Maxton  v. 
Gheeu,  75  Pa.  St.  1G6;    Smith  v.  Bouvier,  70  Pa.  St.  325. 


SHIP    BROKERS. 


63 


loss.-^-  Wliere  the  broker  is  given  a  "stop  order," — that  is,  an  in- 
struction to  buy  or  sell  wiien  the  nuirlvet  reaches  a  certain  figure, — 
he  must  wait  for  some  other  broker  to  make  that  price,  and  not  make 
it  himself  bv  offering  to  buy  or  sell  at  that  priee."^  Ordinarily,  in 
stock  transactions  the  brokers  do  not  disclose  their  clients,  but  deal 
only  with  each  other.  The  usual  rules  of  liability  apply,  however, 
and  a  broker  who  discloses  the  name  of  his  principal  will  not  be 
liable  on  the  contract  he  makes; -^*  otherwise,  he  will.^^^  One  who 
has  deposited  margins  with  a  broker,  and  ordered  the  purchase  of 
stock,  may  withdraw  the  margins  at  any  time  before  the  order  is 
executed,  and  revoke  the  broker's  authority. ^^"^ 

SHIP  BROKERS. 

23.  Ship  brokers  negotiate  the  purchase  and  sale  of  ships 
and  the  business  of  freighting  vessels.^*^ 

Ship  brokers  engaged  in  the  business  of  selling  ships  resemble  in 
many  respects  real-estate  brokers.^ ^^     A  contract  to  pay  a  broker  a 

252  Smith  V.  Bouvier,  70  Pa.  St.  325;  Davis  v.  Gwynne,  57  X.  Y.  67<>; 
Allen  V.  McConihe,  124  N.  Y.  342,  2G  N.  E.  S12;  Galigher  v.  Jones.  129  U.  S. 
193,  9  Sup.  Ct.  335.  Where  a  brolier  who  had  purchased  securities  for  a 
customer  on  margins  is  directed,  after  the  margin  is  exhausted,  to  sell,  it  is 
his  duty  to  sell  within  a  reasonable  time  thereafter,  and,  if  he  fails  to  do  so, 
he  is  liable  for  the  resulting  loss.  Zimmermaun  v.  Heil,  86  Hun,  114,  33  X. 
Y.  Supp.  391. 

2  53  Porter  v.  Worniser,  94  N.  Y.  431;  Wicks  v.  Hatch,  62  N.  Y.  535; 
Wronkow  v.  Clews,  52  X.  Y.  Super.  Ct.  176;  Hope  v.  Lawrence,  50  Barb.  (X. 
Y.)  258. 

254  Coles  V.  Bristowe,  4  Ch.  App.  3. 

255  Nickalls  v.  Merry,  L.  R.  7  H.  L.  530;  Royal  Exch.  Ins.  Co.  v.  Moore,  11 
Wkly.  Rep.  592;   Stray  v.  Russell,  1  El.  &  El.  8S8. 

2  56  Fletcher  v.  Marshall,  15  Mees.  &  W.  761. 

2  57  Bouv.  Law  Diet.  tit.  "Brokers." 

25S  For  a  ship  broker's  right  to  commissions,  see  Stillman  v.  Mitchell,  2 
Rob.  (N.  Y.)  523;  Rowland  v.  Coffin,  47  Barb.  (X.  Y.)  653;  Brown  v.  Post. 
6  Rob.  (X.  Y.)  Ill;  Cook  v.  Fiske,  12  Gray  (Mass.)  491;  Cook  v.  Welch,  0 
Allen  (Mass.)  350;  Rennell  v.  Kimball,  5  Allen  (Mass.)  356.  For  the  effect  of 
the  words  "by  telegraphic  authority,"  used  by  a  ship  broker  in  signing  a 
charter  party,  on  his  implied  warranty  of  authority,  see  Lilly  v.  Smales  [1892J 
1  Q.  B.  456. 


54  BROKICRS. 

siiciilicd  fdiMmission  for  ol»(;iiiiiiii;-  ;i  iliMiIci'  (»f  :i  m-sscI  fiimi  llic 
I'nitrd  States  ^(ivcrniiicnt  is  im»i  void  on  iIk-  i^idiiiid  iliai  il  coiilra- 
vciu's  public  policy.-'''"  The  busiix-ss  of  a  sliip  broker  includes  the 
puichase  and  sale  of  ships,  and  the  neuoilalion  of  contracts  ft)r  build- 
iiii:  thcni.-''^  as  well  as  the  soli<iiin,u  of  frei^ihi  for  Ihe  owner  of  the 
M  ssel.  or  the  secuiiuf;  of  a  vessel  to  caiiv  the  goods  of  the  shippef. 
Where  a  ship  broker  has  negotiated  a  charter  party,  the  loss  of  the 
vessel  during  the  voyage  will  not  deprive  him  of  his  coujniissions.-°* 

INSURANCE  BROKERS. 

24.  Insurance  brokers  negotiate  contracts  of  insurance  gen- 
erally as  agents  for  the  insured. 

Persons  wlio  negotiate  insurance  on  behalf  of  the  insurer  are 
more  properly  called  "insuraiK'e  agents."  A  broker  who  acts  for  the 
insured  may.  nevertheless,  be  the  agent  of  the  insurer  for  receiving  the 
}»remiums.-*'-  liut  the  broker  has  no  authority  to  give  the  insured 
credit  for  his  preraiums.-"'  unless  the  insurer  is  in  the  habit  of  giving 
the  broker  credit. ^^*  Being  the  agent  of  the  insured,  the  broker's 
statements  in  making  an  application  for  a  policy  are  binding  on  the 
insured,  and.  if  false,  will  avoid  the  policy.-''^  Where  a  broker  has  ])ro- 
cured  the  insurance  which  he  was  instructed  to  negotiate,  his  author- 
ity to  act  for  his  principal,  the  insured,  is  at  an  end.  He  cannot  sur- 
render the  policy  for  cancellation;  -°®    nor  has  he  authority  to  receive 

250  llowland  v.  Coffin,  47  Barb.  (N.  Y.)  G53. 

»oo  Holmes  v.  Neafie,  151  Pa.  St.  392,  24  All.  1006. 

2«i  Hagar  v.  Donaldson,  154  Ta.  St.  242.  25  Atl.  824. 

262  How  V.  Insurance  Co.,  80  N.  Y.  .".0;  Mayo  v.  Pew,  101  Mass.  555;  Mon- 
itor Mut.  Fire  Ins.  Co.  v.  Y'oung,  111  Mass.  5;]7;  Crousillat  v.  Ball,  3  Ycates 
(Pa.)  375;   Hartford  Fire  Ins.  Co.  v.  Reynolds,  3G  Mich.  502. 

203  Ilambleton  v.  Insurance  Co.,  G  Biss.  IH.  Fed.  Cas.  No.  5,972;  Marland 
V.  Insurance  Co.,  71  Pa.  St.  31>3. 

2«'«  White  V.  Insurance  Co.,  120  Mass.  ;'i30;  Train  v.  Insurance  Co.,  <i2  N. 
V.  .598;  .Stebbius  v.  Insurance  Co.,  GO  N.  H.  G5:  Bang  v.  Banking  Co.,  1 
Hughes.  290.  Fed.  Cas.  No.  s:{S;  Cf.  (Jontry  v.  Insurance  Co..  15  Mo.  App. 
215. 

2c;  Standard  Oil  f'o.  v.  'iriumiili  Ins.  Co..  Gt  N.  Y.  S5;  Ben  I'rankiln  Ins. 
<'o.  V.  Wi-ary,  4  111.  .\iip.  71;  Mci'nrliiinl  v.  Insurance  Co..  <i  W.  Va.  425; 
Hartford   Fire  Ins.  Co.  v.   Ucynolds,  M  .Micb.  ."»(i2. 

200  Bennett   v.  Insurance  Co.,   115  Mass.  241;     \au   \alkeuburgli    v.   Insur- 


CUSTOM-HOUSK    UROKKHS.  ■)•) 

for  (lie  iiisiii'cd  iioliccs  nllVcl iiij:;  llw  iiisiiiaiicc.-''  unless  lie  is  r-i'^'ii- 
hilly  ciniilnycd  hy  liic  iiismcd  (o  allciid  to  his  liisiirnMcr.-''" 

The  lien  of  Jin  iiisnrini(<'  lii'oker  has  already  been  coiisidei-ed.-" ' 
Suth  a  bi'olcer  is  bound  to  procure  iiismance  in  reliable  coMiitanies/-^" 
and  to  see  that  the  policy  is  so  drawn  that  it  covers  the  risk  intended 
to  be  insured  against.-^^ 

An  insurance  broker  may  act  under  a  del  credere  comtnission,  and 
guaranty  the  solvency  of  the  insurers  with  whom  he  takes  out  policies 
for  his  clients.-^* 

CUSTOM-HOUSE  BROKERS. 

25.  Custom-house  brokers  arrange  the  entry  and  clearance 
of  ships,  and  the  importation  and  exportation  of 
merchandise. 

Custom-house  brokers  are  defined  by  the  United  States  statutes  ^'" 
as  follows:  "Every  person  whose  occupation  it  is,  as  the  agent  of  oth- 
ers, to  arrange  entries  and  other  custom-house  papers,  or  transact 
business  at  any  port  of  entry  relating  to  the  importation  or  exporta- 
tion of  goods,  wares,  or  merchandise,  shall  be  regarded  a  custom- 
house broker.''  The  term  is  also  applied  to  agents  authorized  to 
attend  to  the  entry  and  clearance  of  ships. -^* 

ance  CJo.,  51  N.  Y.  4l>5;    Rothschild  v.  lusuiance  Co.,  5  Mo.  App.  596;    Latoix 
V,  Insurance  Co.,  27  La.  Ann.  113.     But  see  Goodson  v.  Brooke,  4  Camp.  1(>3. 
2fiT  "V^'hite  V.  lusuiance  Co.,  120  Mass.  330;    Hermann  v.  Insurance  Co..  100 
N.  Y.  411.  .'5  N.  E.  341;   Grace  v.  Insurance  Co..  109  U.  S.  278.  3  Sup.  Ct.  207. 

268  Standard  Oil  Co.  v.  Triumph  Ins.  Co.,  (14  N.  Y.  85. 

269  Ante,  p.  40.  And  see  the  following  cases:  Spring  v.  Insurance  Co..  8 
Wheat.  2(>8:  Cranston  v.  Insurance  Co.,  5  Bin.  (Pa.)  538;  Moody  v.  Webster. 
3  Pick.  (Mass.l  424;  Sharp  v.  ^^'hipple,  1  Bosw.  (N.  Y.)  557;  Foster  v.  Iloyt, 
2  Johns.  Cas.  (N.  Y.)  327. 

2T0  Gettins  v.  Scudder.  71  111.  8(3. 

271  Park   V.   Hammond,    0  Taunt.   495;     Moore   v.    Mourgue.    2   Cowp.    479; 
Mallough  V.  Barber.  4  Camp.  1.50;    Maydew  v.  Forrester,  5  Taunt.  i\l~j. 
27  2  Grove  v.  Dubois,  1  Term  II.  112. 
273  14  Stat.  117. 
«74  Black.  Law  Diet.  tit.  "Custom-House  Broker.** 


WBHT    rUBLISIllNO    CO.,  PRINTKK8  A.-tU  8TKBKUTY  PKHS,  8T.  I-AWL,   MIWN. 


PKINCIPLI^:S 


OK    IHK 


LAW  OF  CONDITIONAL  SALES  AND 
CHATTEL  MORTGAGES 


A  MONOGRAPH 


St.  Paul,  Minn. 

WEST  PUBLISHING  CO. 

1899 


Copyright,  1899, 

BY 

WEST  PUBLISHING  COMPANY. 


CONDITIONAL  SALES  AND  CllATTLL 
iMOKTGAGLS. 


CONDITIONAL    SALES. 


1.  GENERAL  CHARACTERISTICS. 

An  agreement  to  sell  personal  property  upon  condition  is  executory, 
and  DO  title  passes  from  the  seller  to  the  purchaser  until  the  condition 
is  performed.  The  nature  of  the  condition  varies  in  different  cases. 
Thus  the  following  rules  have  been  laid  down : 

"(1)  That  where,  by  the  agreement,  the  vendor  is  to  do  anything  to 
the  goods  before  delivery,  it  is  a  condition  precedent  to  the  vesting  of 
the  property.  (2)  That  where  anything  remains  to  be  done  to  the 
goods  for  ascertaining  the  price,  such  as  weighing,  testing,  etc.,  this  is 
a  condition  precedent  to  the  transfer  of  the  property."  (3)  That  ''the 
parties  may  indicate  an  intention,  by  their  agreement,  to  make  any 
condition  precedent  to  the  vesting  of  the  property,  and,  if  they  do  so, 
their  intention  is  fulfilled."  (4)  "Where  the  buyer  is,  by  the  contract, 
bound  to  do  anything  as  a  condition,  either  precedent  or  concurrent, 
on  which  the  passing  of  the  property  depends,  the  property  will  not 
pass  until  the  condition  be  fulfilled,  even  though  the  goods  may  have 
been  actually  delivered  into  the  possession  of  the  buyer."  ^ 

In  the  first  two  classes  above  mentioned  the  sale  is,  in  a  sense,  con- 
ditional, because  the  performance  of  some  further  act  contemplated 
on  the  part  of  the  seller  must  be  performed  before  title  can  pass ;  but 
the  third  and  fourth  classes,  relating  more  particularly  to  cases  where 

1  Blackb.  Sales,  152,  and  Benj.  Sales,  §§  318,  320,  quoted  in  Harkness  v. 
Kussell,  118  U.  S.  GG7,  7  Sup.  Ct.  51;    Bishop  v.  Shillito,  2  Barn.  &  Aid.  329, 
note;   Brandt  v.  Bowlby,  2  Barn.  &  Add.  932. 
COND.S.— 1 


L  CONDITIONAI.    SAI.KS. 

tho  ijodds  nio  alrciulv  coinplclcd  and  n.^ccrtained.  but  wliore  it  is 
aj;rt'0(l  thai  no  title  shall  pass  until  some  act  is  done  by  the  purchaser, 
— as.  for  example,  payment. — or  to  cases  where  some  particuhir  event 
must  liappoiKor  some  jiarticular  condition  be  ix'rfornicd  by  either  party, 
before  title  shall  pass,  cover  what  are  usii.-illy  described  as  conditional 
sales,  'i'lnis,  in  Mires  v.  Solebay  ^  one  Allsiou  look  sIkm^j)  to  ])astur" 
for  a  certain  time,  with  an  aj»reement  that  if,  at  the  end  of  that  time, 
he  should  pay  a  certain  sum,  he  should  have  the  sheep,  and  before  the 
time  exi>ired  the  owner  sold  them  to  another  person,  and  it  was  held 
that  the  sale  was  valid,  and  that  the  agreement  to  sell  the  sheejt  to 
Allston,  if  he  would  pay  for  them  at  a  certain  date,  did  not  amount  to 
a  sale,  but  only  to  an  agreement.  So,  also,  where  goods  are  sold  to  be 
paid  for  in  cash  or  securities  upon  delivery,  it  is  held  that  the  sales  are 
conditional  only,  and  that  the  vendors  are  entitled  to  retake  the  goods, 
even  after  delivery,  if  the  condition  is  not  ])erformed,  the  delivery  being 
considered  as  conditional.  This  often  haj)pens  in  case  of  sales  by 
auction,  when  certain  terms  of  payment  are  prescribed  with  a  condition 
that,  if  they  are  not  complied  with,  the  goods  may  be  resold  for  ac- 
rount  of  the  buyer,  who  is  to  account  for  any  damage  between  the 
second  sale  and  the  first.  Such  was  the  case  of  l^iniond  v.  Davall."' 
In  Crawcour  v.  Robertson*  certain  furniture  dealers  let  Robertson 
have  a  lot  of  furniture  upon  his  paying  £10  in  cash,  and  signing  an 
agreement  to  pay  £5  per  mgnth  (for  whi<'li  notes  were  given)  nntil  the 
whole  price  of  the  furniture  should  be  jjuid.  and  when  all  the  install 
ments  were  paid,  and  not  before,  the  furniture  was  to  be  the  property 
of  Robertson;  but,  if  he  failed  to  jjay  any  of  the  inslallments,  the  own- 
ers were  authorized  to  take  possession  of  the  property,  and  all  prior 
payments  actually  made  were  to  be  forfeited.  The  court  of  ai>peal 
held  that  the  property  did  not  pass  by  this  agreement,  and  could  noi 
be  taken  as  Robeitson's  ]»roperty,  by  his  trustee,  under  a  liquidation 
[irocceding.  The  same  conclusion  was  reaclx'd  in  the  subsequent  cas(» 
of  Crawcour  v.  Salter. "^  In  these  cases,  it  is  true,  support  of  the  transac 
tions  was  sought  from  the  custom,  whi(;h  prevailed  in  the  places  where 
the  transactions  took  place,  of  hotel  keeix-rs  holding  their  furniture  on 
hire.  Jiut  they  show  that  the  intent  of  the  pai'ties  will  be  recognized 
and  sanctioned  where  it  is  not  contrai-y  to  the  j»olicv  of  the  law.      This 

2  2  Mud.  ■_•«:;.         ay  <J.  i;.   ie;!U.,  <\i  Cli.  I»iv.   tr.).  t- is  Cli.  Div.  :!0. 


GENERAL    CHARACTERISTICS.  3 

policy,  in  England,  is  regulalcd  by  hslatidc  Tl  has  long  beon  a  pro- 
vision of  the  English  bankruptcy  laws,  beginning  with  21  Ja(.  J.  k. 
11),  that  if  any  person  becoming  bankrupt  has  in  his  possession,  order, 
or  disposition,  by  consent  of  the  owner,  any  goods  or  chattels  of  whch 
he  is  the  reputed  owner,  or  takes  upon  himself  the  sale,  alteration,  or 
disposition  thereof  as  owner,  such  goods  are  to  be  sold  for  the  benefit 
of  his  ciodilors.  This  law  has  had  the  effect  of  pi-eventing  or  defeat- 
ing condilioual  sales  accompanied  by  voluntary  delivery  of  possession, 
except  in  cases  like  those  above  referred  to;  so  that  very  few  decisions 
are  to  be  found  in  the  English  books  directly  in  point  on  the  question 
under  consideration.® 

This  presumption  of  property  in  a  bankrupt,  arising  from  his  posses- 
sion and  reputed  ownership,  became  so  deeply  imbedded  in  the  English 
law  that  in  the  process  of  time  many  persons  in  the  profession  were 
led  to  regard  it  as  a  general  doctrine  of  the  common  law,  and  hence 
in  some  states  in  this  country,  where  no  such  statute  exists,  the  prin- 
ciples of  the  statute  have  been  followed,  and  ordinary  conditional  sales 
have  been  condemned  either  as  being  fraudulent  and  void,  as  against 
creditors,  or  as  amounting  in  effect  to  absolute  sales  with  a  reserved 
lien  or  mortgage  to  secure  the  payment  of  the  purchase  money;  this 
being  based  on  the  notion  that  such  sales  are  not  allowed  by  law,  and 
that  the  intent  of  the  parties,  however  formed,  cannot  legally  be  car- 
ried out.  llie  insufficiency  of  this  argument  is  demonstrated  by  the 
fact  that  conditional  sales  are  admissible  in  several  acknowledged 
cases,  and  therefore  there  cannot  be  any  rule  of  law  against  them  as 
such.  They  may  sometimes  be  used  as  a  cover  for  fraud,  and,  when 
this  is  charged,  all  the  circumstances  of  the  case  will  be  open  for  the 
consideration  of  the  jury.  Where  no  fraud  is  intended,  but  the  pur- 
pose of  the  parties  is  that  the  vendee  shall  not  have  the  possession  of 
ihc  goods  until  he  has  paid  for  them,  there  is  no  general  principle  of 
law  to  prevent  them  from  having  effect.  In  this  country,  in  states 
where  no  such  statute  as  the  English  statute  referred  to  is  in  force, 
many  decisions  have  been  rendered  sustaining  conditional  sales  ac- 
companied by  delivery  of  possession,  both  as  between  the  parties  them- 
selves and  as  to  third  persons.^ 

sHarkness  v.  Russell,  118  U.  S.  G63,  669,  7  Sup.  Ct.  51;    Horn  v.  Baker.  9 
East,  215;    Holroyd  v.  Gwyuue,  2  Taunt.  176. 
T  Harkness  v.  Russell,  118  U.  S.  603,  670,  7  Sup.  Ct.  51;    Warren  v.  Liddell, 


4  CONDITIONAL   SALES. 

In  Herring:  v.  Hoppock  *  the  same  doctrine  was  followod.  In  thai 
case  there  was  an  agreement  in  writing  for  the  sale  of  an  iron  safe, 
which  was  delivered  to  the  veivlee,  and  a  note  at  six  months  given 
therefor,  but  it  was  expressly  understood  that  no  title  was  to  pass 
until  the  note  was  paid,  and,  if  not  paid,  the  vendor  was  authorized  to 
retake  the  safe,  and  collect  all  reasonable  charges  for  its  use.  The 
sheriff  levied  on  the  safe  as  property  of  the  vendee,  with  notice  of  the 
plaintiff's  claim.  The  court  of  appeals  held  that  the  title  did  not  pa^s 
out  of  the  vendor.  Paige,  J.,  said:  "Whenever  there  is  a  condition 
precedent  attached  to  a  contract  of  sale,  which  is  not  waived  by  an 
absolute  and  unconditional  delivery,  no  title  passes  to  the  vendee  until 
he  performs  the  condition  or  the  seller  waives  it."  And  upon  breach 
the  seller  may  retake  the  property.* 

2.  BONA  FIDE  PURCHASER  FROM  VENDEE. 

In  Smith  v.  Lynes  ^°  and  Wait  v.  Green  ^^  it  was  held  that  a  bona 
fide  purchaser,  without  notice,  from  the  vendee,  who  is  in  possession 
under  a  conditional  sale,  will  be  protected  as  against  the  original 
vendor.  But  these  cases  were  subsequently  overruled  in  Ballard  v. 
Burgett,^-  Cole  v.  Mann,^^  and  Bean  v.  Edp.'* 

In  Thomas,  Chat.  Mortg.  §  63,  it  is  said  that  the  controlling  test  in 
this  respect  is  found  in  the  distinction  between  a  conditional  sale  of 
chattels  and  a  conditional  delivery  upon  a  sale.     "That  is  to  say,  w© 

110  Ala.  232,  244,  20  South.  89;  Hussey  v.  Thornton,  4  Mass.  404;  Wentworth 
V.  Mafhine  Co.,  163  Mass.  28,  39  N.  E.  414;  Marston  v.  Baldwin,  17  Mass. 
(•►06;  Ban-ett  v.  Pritchard,  2  Tick.  (Mass.)  512,  515;  Coggill  v.  Railroad  Co., 
3  Gray  (Mass.)  545;  Chase  v.  Ingalls,  122  Mass.  liSl;  Forbes  v.  Marsh,  15 
Conn.  384;  Hart  v.  Carpenter,  24  Conn.  427;  Haggerty  v.  rulmer,  0  Johns, 
Ch.  (N.  Y.)  437;   Strong  v.  Taylor,  2  HUl  (N.  Y.)  326. 

8  15  N.  Y.  409. 

»  Isenuan  v.  Conklin,  21  Misc.  Rep.  194,  47  N.  Y.  Supp.  Iu7. 

10  5  N.  Y.  41. 

11  35  Barb.  585,  30  N.  Y.  556. 

12  40  N.  Y.  314. 

13  02  N.  Y.  1. 

1*  84  N.  Y.  510. 

Compare  Dows  v.  Kidder,  84  N.  Y.  121.  Parkor  v.  Bnxlor.  SO  N.  Y.  580, 
and  Farwcll  v.  Bank,  90  N.  Y.  48.'},  which  arc  discussed  in  llarkuoss  v.  Itus- 
sell,  118  U.  S.  003,  075,  7  Sup.  Ct.  51. 


BONA    FIDE    PUIUMIASEIi    FROM     VI.NDKK.  O 

are  to  examine  as  to  whether  the  sale  itself  has  boon  upon  the  condition, 
or  whether  the  sale  is  absolute,  and  the  condition  only  affects  the 
rij,'ht  of  the  vendee  to  immediate  possession.  The  question  in  each 
case  will  be  as  to  whether  the  contract  of  sale  is  or  is  not  complete. 
If  it  is  an  executed  sale,  the  obligation  of  the  buyer  to  pay  is  absolute, 
and  the  property  is  at  his  risk.  If  it  is  destroyed  or  lost,  the  obliga- 
tion to  pay  will  not  be  discharged,  notwithstanding  that,  as  between 
the  vendor  and  the  vendee,  the  title  has  not  passed.  As  a  security 
for  the  vendor,  it  may  be  stipulated  that  the  delivery  shall  not  carry 
the  title;  and  this  agreement  will  so  fully  protect  the  vendor,  while 
there  are  no  intervening  rights,  that  the  distinction  now  being  made 
will  not  then  be  important;  but  after  actual  delivery,  although  as 
between  the  parties  to  the  sale  such  delivery  be  conditional,  a  bona  fide 
purchaser  from  the  vendee  obtains  a  perfect  title,  though  a  voluntary 
assignee  of  the  purchaser  does  not.  But  where  a  contract  is  for  a  sale 
in  the  future,  and  the  delivery  amounts  to  a  mere  bailment,  and  the  sale 
is  on  the  condition  that  certain  payments  are  made,  so  that  the  prop- 
erty, while  in  the  hands  of  the  so-called  'vendee,'  is  at  the  risk  of  the 
vendor,  then  the  intended  vendee  has  no  title  to  the  property,  and  can 
convey  none,  even  to  a  bona  fide  purchaser."  ^^ 

In  1884,  however,  a  statute  was  passed  in  New  York,  which  is  now 
found  embodied  in  the  so-called  *'Lien  Law,"  ^'^  providing  that,  "except 
as  otherwise  provided  in  this  article,  conditions  and  reservations  in  a 
contract  for  the  conditional  sale  of  goods  and  chattels,  accompanied  by 
immediate  delivery  and  a  continued  possession  of  the  thing  con- 
tracted to  be  sold,  to  the  effect  that  the  ownership  of  such  goods  and 
chattels  is  to  remain  in  the  conditional  vendor,  or  in  a  person  other 
than  the  conditional  vendee,  until  they  are  paid  for,  or  until  the  occur- 
rence of  a  future  event  or  contingency,  shall  be  void  as  against  subse- 
quent purchasers,  pledgees,  or  mortgagees,  in  good  faith;  and  as  to 
them  the  sale  shall  be  deemed  absolute,  unless  such  contract  of  sale 
containing  such  conditions  and  reservations,  or  a  true  copy  thereof,  be 
filed  as  directed  in  this  article."  In  nearly  all  of  the  states  the  title 
of  the  vendor,  subject  in  some  states  to  statutes  similar  to  that  just 

15  Thomas,  Chat.  Mortg.  §  G3,  citing  numerous  cases,  and  also  articles  upon 
the  title  of  "Bona  Fide  Purchasers"  in  24  Alb.  Law  J.  185,  226,  264,  280,  343, 
363. 

16  Laws  ISDT,  c.  418,  §  112. 


G  CONDITIONAI.    SAl.KS. 

(liioti'd.' ■  has  IxM'ii  suslfiiiicd,  not  oiilv  ;is  (o  \]w  crcdilois  of  (Ik^  bank- 
nijii.  liiit  mIso  as  lo  bona  tide  jinrcliascis  from  liiiii.'''  In  many  slates 
ilu'  subject  is  now  i'(\<j;idat('d  by  stalnlcs.  sonic  of  wliicli  rcciuirt'  tiliiij; 
of  tlic  afinM'incnt,  while  olliois  declare  (hat  no  ajjieenient  that  per- 
sonal jMojuMty  delivered  to  another  shall  remain  the  jjroperty  of  the 
veixlor  shall  be  valid  ajjainst  third  persons  wiMioni  notice.^* 

3.  RULE  IN  THE  FEDERAL  COURTS. 

The  lialiility  of  jiropeity  to  be  sold  nnch-r  lej^al  process  issnin":  from 
the  courts  of  the  state  where  it  is  situateil  nmst  bo  detcrniiued  by  the 
law  there,  rather  than  tliat  of  the  jurisdiction  where  the  owner  lives. 
Tliese  decisions  rest  on  the  ground  that  every  state  lias  the  rijj^ht  to 
regulate  the  transfer  of  ])i'0])(^rty  within  its  limits,  and  that  whocncr 
sends  property  to  it  impliedly  submits  to  the  regulations  concerning 
its  transfer  in  force  there,  although  a  different  rule  of  transfer  pre- 
vails in  the  jurisdiction  where  he  resides.-"* 

4.  AFFIRMANCE  OF  SALE  BY  SELLER. 

Wlien  chattels  are  sold  upon  condition  that  title  shall  not  pass  from 
the  vendor  to  the  vendee  until  the  agreed  price  is  paid,  the  vendor  may 
waive  the  right  to  retake  the  chattels  on  default,  and  recognize  title 

17  Wrif;ht  v.  Barnard.  St>  Iowa,  IGG.  .JC.  N.  W.  4L'4;  Knowles  Loom  Works 
V.  Vaeher,  .j7  N.  J.  Law,  400,  IM  Atl.  '.\m. 

18  Warren  v.  Liddell,  110  Ala.  232,  244,  20  South.  SO;  Went  worth  v.  Ma- 
chine Co.,  1G3  Mass.  28.  39  N.  E.  414;  Thomas,  Chat.  Mortg.  §  58.  See 
Ix'atlu'rl)erry  v.  Connor,  ~A  N.  .T.  Law.  172,  23  Atl.  «]S4.  Conti'a.  Rylo  v.  Loom 
Works,  31  C.  C.  A.  340,  87  Fed.  !)7i;;  I'liion  Bank  of  Wilton  v.  Creamery  Tack- 
ape  Mffc.  Co.  (Iowa)  74  N.  W.  021. 

If  Call  v.  Seymour.  40  Ohio  St.  070;  Kylo  v.  Loom  Works,  31  C.  C.  A.  340. 
87  Fed.  UlC;  Marquette  Mfg.  Co.  v.  .Teffrey.  40  Mich.  2S3,  13  N.  W.  r)02;  Ilark- 
ness  v.  Russell,  118  U.  S.  GG3,  G7r»,  7  Sup.  Ct.  .■>! :  Ccorge  v.  Slubbs,  2C>  Me. 
243;  Sargent  v.  Glle,  8  N.  IT.  32."i:  Ileiilin  v.  Hdl.  .'.(t  VI.  i:M:  Tliorpe  v.  Fow- 
ler, r>7  Iowa,  541,  11  X.  W.  .3;  Cole  v.  Herry,  42  N.  .1.  L:iw.  .30S.  See.  also. 
Mr.  Freeman's  note  to  K.-inaga  v.  Taylor,  7  Oino  Si.  l.l I.  in  70  Am.  Dec.  (52; 
and  romiKire  Ilaak  v.  Linderman,  04  I'a.  St.  40t>;  \'an  i»u/.or  v.  Allen,  90 
111.  4Jrt);   Ilervey  v.  Locomotive  Works,  93  U.  S.  G04.  071. 

•■^^(Jreen  v.  Van  Hnskirk,  5  Wall.  .'>U7,  7  A\all.  l.'V.i;  Ilervey  v.  Locomotive 
Works,  03  U.  S.  004. 


SAI.K    HY     HAILKK,    FOU    IIIKK.  I 

in  th<'  vondf'C.^^  If,  in  iifliiiiiiinrr'  of  the  ((nilriicl.  (lie  vendor  seizes 
the  chattels  for  flic  avowed  i)iiri)ose  of  selliuK  llieiii,  and  colleeting 
the  amount  due  upon  the  contract,  he  has  no  right  to  seize  and  sell 
or  seize  and  retain  more  than  is  sufTicient  to  satisfy  his  demand  and 
cx|t<'iis('S.-* 

TIm-  fa<t  that  the  vendor  recovers  against  the  conditional  vendee  a 
judgment  for  so  much  of  the  purcliase  price  as  has  not  been  paid  by 
the  vendee,  after  the  latter  has  taken  possession  under  the  conditional 
agreement,  does  not  impair  the  vendor's  title,  and  the  vendee  still  has 
uo  leviable  interest  in  tlic  i>roperty  until  the  purchase  money  is  fully 
paid.*^ 

5.   SALE  BY  BAILEE  FOR  HIRE. 

Where  the  owner  of  personal  property  delivers  it  to  a  bailee  for  hire, 
under  an  agreement  that  the  latter  may  purchase  it,  the  latter,  prior 
to  the  performance  of  the  coiKlition,  cannot  give  title  to  a  purchaser  in 
good  faith,  for  value,  and  without  notice.^* 

'1  Detroit  Ileatiug  &  Lighting  Co.  v.  Stevens.  16  Utah,  177,  52  Pac.  379; 
Hervey  v.  l>iniou(l  (N.  H.)  3U  Atl.  331. 

2::  O'Kouike  v.  Hadfock,  114  X.  Y.  541.  .j4S),  22  N.  E.  33.  See,  also,  section 
lie  of  the  New  York  Lien  Law  (Laws  18U7,  c.  418),  providing  that,  in  case  of 
a  retaking  by  the  vendor  or  a  successor  in  interest,  the  goods  shall  be  re- 
tained for  a  period  of  30  days,  during  which  the  vendee  or  his  successor  in 
interest  may  comiily  with  tlio  terms  of  the  contract,  and  thereupon  receive 
the  property,  and  that  after  the  expiration  of  that  period,  if  the  terms  are 
not  complied  witli.  the  articles  may  be  sold  at  public  auction  on  notice,  in 
which  case  the  vendor  or  his  successor  in  interest  may  retain  from  the  pro- 
ceeds the  amount  due  on  his  contract  and  the  expenses  of  storage  and  of 
sale;  the  balance  to  be  held  subject  to  the  demand  of  the  vendee  or  his  suc- 
cessor in  interest  for  30  days,  and  then  deposited  with  tlie  treasurer,  cham- 
berlnin.  or  supervisor,  who  shall  hold  it  for  the  vendee  or  his  successor  in 
interest  for  five  years,  and,  if  unclaimed,  shall  transfer  it  to  the  funds  of  the 
town,  village,  or  city.  Similar  provisions  exist  in  many  states.  Orner  v. 
Manufacturing  Co.,  IS  Ind.  App.  122.  47  N.  E.  644;  Richardson  Drug  Co.  v. 
Teasdall.  52  Neb.  608,  72  N.  W.  1028;  Milburn  Mfg.  Co.  v.  Wayland  (Tenn. 
Ch.  App.)  43  S.  W.  129. 

23  National  Cash-Kegister  Co.  v.  Coleman.  85  Hun,  125,  32  N.  Y.  Supp.  593: 
Campbell  Printing  Press  &  Mfg.  Co.  v.  Rockaway  Pub.  Co.,  50  N.  J.  Law,  676, 
29  Atl.  681;   Clark  v.  Richards  (Minn.)  75  N.  W.  605. 

24  Austin  V.  Dye,  46  N.  Y.  500;  Ryle  v.  Loom  Works,  31  C.  C.  A.  340,  87 
Fed.  976. 


CONDITIoNAI,    SAI.KS. 


0.   SALE  BY  BORROWER  HAVING  RIGHT  TO  PURCHASE. 

W'liere  an  owner  dolivors  goods  to  another,  who  signs  a  writing  re- 
citing that  he  has  "borrowed  and  received"  the  goods,  to  be  returned 
to  the  U'nder  on  demand,  and  tliat  the  borrower  may  purcliase  the 
goods  for  a  certain  sum,  payable  in  instalbmnts.  wliii  h  he  agrees  ^o 
|i;i\.  and  that  until  payment  the  liglit  to  jtosscssion  shall  it-main  in  the 
lender,  no  lilh'  jKisses  to  the  boi-rower,  but  the  title  rcniains  in  the 
lender,  who,  until  payment  of  the  stipulated  sum,  is  entitled  to  posses- 
sion."-'^ 

7.   FRAUD. 

The  common  law  recognizes  the  validity  of  verbal  contracts  of 
sales  of  chattels  for  any  amount,  and  however  proven;  but  a  great 
modification  was  introduced  by  the  statute  of  20  Tar.  TI.  c.  3,  known 
as  the  ''Statute  of  Frauds,"  which  exists,  with  some  slight  variations, 
in  almost  every  state  of  the  Union.  The  seventeenth  section  of  the 
English  statute  provided  that  no  contract  for  the  sale  of  any  goods, 
wares,  or  merchandise  for  the  price  (value)  of  £10  sterling  or  upwards 
shall  be  allowed  to  be  good  except  the  purchaser  shall  accept  part  of 
the  goods  so  sold,  and  actually  receive  the  same,  or  give  something  in 
earnest  to  bind  the  bargain,  or  in  part  payment,  or  that  some  note  or 
memorandum  in  writing  of  the  said  bargain  be  made  aiMl  signed  by 
the  parties  to  be  charged  by  such  contract,  or  their  agents  thereunto 
lawfully  authorized. 

In  New  York  it  is  provided  by  se^'tion  iM  of  the  Personal  Property 
I^w -'  that:  ''Every  agreement,  i)romise  or  undertaking  is  void  un- 
less it,  or  some  note  or  memorandum  thereof,  Im^  in  writing  and  sub- 
scribed by  the  party  to  be  charged  therefor,  or  by  his  lawful  agent,  if 
such  agreement,  promise  or  undertaking  *  *  *  is  a  contract  for 
the  sale  of  any  goods,  chattels  or  things  in  action  for  the  j)rice  of  !?.")l)  or 
more,  and  the  buyer  does  not  accept  and  receive  part  of  snch  goods, 
or  the  r'\i(|ences,  or  some  (tf  them,  of  such  things  in  action,  nor  at  the 
time  pay  any  jtart  of  the  purchase  juice."  And  by  section  1*4  of  the 
same  act  it  is  jirovided  that:  "Every  transfer  of  any  interest  in  per- 
sonal property  or  the  income  thereof,  and  evt-ry  charge  on  such  prop- 
erty <tr   income,   madi*   wilii    the   intent    to    Iiimlci'.   »|el;iy   or   defiaiid 

»6  NIclioIs  V.  Aslitoii,  l.Vi  Mass.  110.-.,  -J'J  N.  E.  ol'J.         -«  Laws   is:>7,  c.    117. 


KKAUI).  9 

Cfcdilois  (»f  oIIht  |m'i.s()iis  of  (lirir  lawrul  suits,  dwiiiii^^cs,  foifcil  iircs, 
(IcMs  or  (lriii;iii(is.  ;iii(l  every  bond  or  other  evidence  of  debt  given,  suit 
(•omiiK'nrrd.  or  decree  or  jnd^Mueiit  stifTei-ed,  vvilli  such  intent,  is  void 
as  u;;ainsl  every  person  so  liiiidered,  delayed,  or  defrauded."  And  by 
section  25  it  is  provided  that:  "Every  sale  of  goods  and  chattels  in 
the  possession  or  under  the  control  of  the  vendor,  and  every  assignment 
of  goods  and  chattels  l)y  way  of  security  or  on  any  condition,  but  not 
constituting  a  mortgage  nor  intended  to  operate  as  a  mortgage,  unless 
accompanied  by  an  inuuediate  delivery,  followed  by  actual  and  contin- 
ued change  of  j)ossession,  is  presumed  to  be  fraudulent  and  void  as 
against  all  persons  who  are  creditors  of  the  vendor  or  person  making 
the  sale  or  assignment,  including  all  persons  who  are  his  creditors  at 
any  tiuw^  while  such  goods  or  chattels  remain  in  his  possession  or  under 
his  control,  or  subsequent  purchasers  of  such  goods  and  chatt<'ls  in 
good  faith;  and  is  conclusive  evidence  of  such  fraud  unless  it  appear 
on  the  part  of  the  person  claiming,  under  the  sale  or  assignment,  that 
it  was  nuide  in  good  faith,  and  without  intent  to  defraud  such  creditor 
or  purchaser.  But  this  section  does  not  ajjply  to  a  contract  of  bot- 
tonii-y  or  respondentia,  or  to  an  assignment  of  a  vessel  of  goods  at  sea 
or  in  a  foreign  port;"  and  by  section  26  that  "the  question  of  the  ex- 
istence of  fraudulent  intent  in  cases  arising  under  this  article  is  a 
question  of  fact,  and  not  of  law."  The  fact  that  the  conditional  vendee 
of  goods  not  delivered  is  permitted  by  the  agreement  to  sell  the  articles 
embraced  therein  upon  condition  that  the  proceeds  of  sales  shall  be 
accounted  for  and  paid  to  the  vendee  to  apply  upon  the  purchase  price, 
does  not  impair  the  lights  of  the  vendor,  or  render  it  void  as  to  the 
creditors  of  the  vendee,^^  The  same  principle  applies  where  there  is  a 
delivery  under  an  agreement  for  conditional  sale,  with  a  right  in  the 
purchaser  to  sell,  and  remit  the  proceeds.^^  But  if  the  conditioml 
vendee  is  given  absolute  power  to  sell  for  his  own  benefit  or  to  con- 
sume the  property,  the  result  is  to  vest  title  in  the  purchaser  as  against 
his  creditors.-* 

=  -  Prentiss  Tool  &  Supply  Co.  v.  Sehirmer,  136  N.  Y.  305,  32  N.  E.  849; 
Mausur  &  Tebbotts  Implement  Co.  v.  Reeman-St.  Clair  Co.  (Tex.  Civ.  App.)  45 
S.  W.  729. 

28  Cole  v.  Mann.  G2  N.  Y.  1;   Ufford  v.  Winchester,  G9  Vt.  542,  38  Atl.  230. 

2!»  Devlin  v.  O'NeiU,  6  Daly  (N.  Y.)  305;  Frank  v.  Batten,  49  Uun,  91,  1  N. 
Y.  Supp.  705. 


10  CONDITIONAL    SALKS. 

8.  FORM  OF  CONDITIONAL  SALE. 

Tho  TiKM'O  iiomiiinl  form  (tf  a  Iraiisaction  is  iiol  toiiclusivo  in  »le- 
Icriuininj;  whether  it  is  or  is  not  a  conditional  sale  The  law  looks 
at  its  real  nature.  Thus,  a  transaction  in  form  a  lease,  or  bailment, 
or  absolute  Siile  may  be  in  fact  a  conditional  sjile  if  the  intent  is  to 
make  an  agreement  of  sale  conditional  upon  the  happening  of  a  con- 
tingency or  the  performance  of  a  condition.^" 

9.  SPECIAL  STATUTORY  PROVISIONS. 

In  addition  to  the  provisions  already  referred  to,  the  New  York 
statute,  which  may  be  taken  as  typifying  in  general  the  statutes  of 
other  states,  although  the  latter  vary  from  it  and  among  themselves  in 
many  respects,  contains  the  following  provisions: 

Defi}iitio?7S. 

"The  terra  'conditional  vendor,'  when  used  in  this  article,  means  the 
person  contracting  to  sell  goods  and  chattels  upon  condition  that  the 
owiK*rship  thereof  is  to  remain  in  such  person  until  such  goods  and 
rhattels  are  fully  paid  for  or  until  the  occurrence  of  any  future  event 
or  contingenc}';  the  term  'conditional  vendee,'  w'hen  so  used,  means 
the  person  to  whom  such  goods  and  chattels  are  so  sold."  '* 

The  same  statute,  after  providing  that  conditions  and  reservations 
in  a  contract  for  conditional  sale  accompanied  by  immediate  delivery 
and  continued  possession  of  the  thing  contracted  to  be  sold,  to  tho 
effect  that  the  ownership  of  such  goods  and  chattels  is  to  remain  in  the 
vendor  until  payment,  or  some  future  event,  shall  be  void  as  against 
subso(pi('nt  purchasers,  pledgees,  or  mortgagees  in  good  faith,  and  as 
to  them  the  sale  shall  be  deemed  absolute,  unless  such  contract  of  sale, 
or  a  true  copy  thereof,  shall  be  filed,  as  there  provided. ^^  The  lien 
law  goes  on  to  provide  in  section  114  that  the  provisions  of  the  preced- 

30  Wright  V.  Harnard,  SO  Iowa,  IGd,  r.O  N.  W.  42^;  Singer  Scwiiig-Mach. 
Co.  V.  Ilolcorab,  40  Iowa,  X\;  Fjirnuhar  v.  Mc.Movy.  142  Ta.  St.  2Si,  21  Atl. 
811;   Kyle  v.  Loom  Works,  'M  C.  C.  A.  :{40,  i>7  1\»1.  1)70. 

ni  Li«'i)  Law  (Laws  1S!I7,  c.  418,  §  110). 

«i  Id.  S§  Uli,  113. 


SAl.K    WITH     (II'IION    TO     KKTIIiN.  11 

ing  article,  relating?  to  chattel  mortgaRes,  apply  to  the  indorsement, 
entry,  refiling,  and  diHchargo  of  contracts  for  the  conditional  sale  of 
goods  and  clinKcls.  Upon  tliis  siibjcd,  llicivforo,  reference  is  here 
made  to  the  subject  of  tiling  of  cliatlel  mortgages,  which  is  discussed 
hereafter.*" 

Exceptions. 

The  New  York  stat\ite  does  not  apply  to  a  number  of  articles 
enumerated  therein,  including  household  goods,  pianos,  threshing  ma- 
chines, coaches,  carriages,  bicycles,  and  other  devices  for  locomotion 
by  human  power,  if  the  contract  for  the  sale  thereof  is  executed  in 
duplicate,  and  one  duplicate  delivered  to  the  purchaser. 

10.  SALE  WITH  OPTION  TO  RETURN. 

Where  an  ownei-  of  property  sells  it  subject  to  the  condition  that  the 
purchaser  may,  at  his  option,  return  it,  the  seller  is  thereby  devested 
of  all  title  and  control  over  the  goods,  unless  the  seller  elects  to  return 
them;  for  until  the  exercise  of  this  option  the  goods  are  his;  he  has 
the  jus  dis])onendi,  and  is  at  lil)erty  to  sell  upon  his  own  terms,  and  to 
whom  he  pleases,  the  only  consequence  being  that  he  is  to  pay  the  seller 
the  agreed  price,  and  to  this  extent  becomes  the  seller's  debtor.^*  In 
this  respect  such  a  sale  differs  radically  from  a  conditional  sale,  prop- 
erly so  called,  for  here  the  title  passes  subject  to  a  condition  subse- 
quent, while  in  a  proper  conditional  sale  the  title  does  not  pass  until 
the  performance  of  a  condition  precedent  thereto. ^^ 

33  See,  also,  Wriiilit  v.  Barnard,  89  Iowa,  16C,  56  N.  W.  424;  Knowles 
Loom  Works  v.  Vacher.  57  N,  J.  Law,  400,  31  Atl.  306;  In  re  Wilcox  &  Howe 
Co.,  70  Conn.  220,  39  Atl.  163;  Cohen  v.  Manufacturing  Co.  (Conn.)  40  Atl. 
455;  Holland  v.  A.lams  (Ga.)  .30  S.  E.  432;  .Johnston  v.  AVood  (Wash.)  53  Pac. 
707;   Woolley  v.  Wagon  Co.,  59  N.  J.  Lo-w,  278,  35  Atl.  789. 

8  4  Costello  V.  Herbst,  18  Misc.  Rep.  176.  41  N.  Y.  Supp.  574. 

so  Fish  V.  Benedict,  74  N.  Y.  613;  Carter  v.  Wallace,  32  Hun  (N.  Y.)  384; 
Ex  parte  White,  6  Ch.  App.  397. 


12  CHATTEL    MORTQAUES. 


CHATTEL  MORTaAGES. 


11.  CHATTEL  MORTGAGE  DEFINED. 

A  chattel  mortgage  is  a  present  transfer  of  the  tit  If  to  poisonal 
property,  snbject  to  defeat  by  })aynu'nt  of  the  sum  or  instrument  it  is 
given  to  secure;  and,  in  default  of  performance  by  tlie  mortgagor  of 
the  condition,  the  title  of  the  mortgagee  becomes  absolute.*'  "A  chat- 
tel mortgage  is  a  transfer  of  personal  property  as  security  for  a  debt  or 
obligation,  in  such  form  that,  upon  failure  by  the  mortgagor  to  comj»ly 
with  the  terms  of  the  contract,  the  title  of  the  property  will  be  in  the 
mortgagee."  "^ 

12.  CHATTEL  MORTGAGE  AND  CONDITIONAL  SALE  DISTIN- 
GUISHED. 

The  owner  of  personal  property  may  sell  the  same  outright,  subject 
to  DO  condition.  Tliis  is  an  absolute  sale.  Instead  of  this,  he  may 
agree  to  sell  it  upon  a  condition  to  be  performed  by  the  purchaser. 
This  is  a  conditional  sale.  Or,  again,  he  may  make  an  absolute  sale, 
and  take  back  from  the  purchaser  a  chattel  mortgage  upon  it,  by  virtue 
of  which,  upon  the  failure  of  the  purchaser  to  perform  something 
which  he  agrees  to  do,  the  title  to  the  property  will  again  become  vested 
in  the  original  owner.  Or,  still  again,  he  may  keep  the  property,  and 
himself  give  a  mortgage  upon  it,  in  which  case,  upon  liis  failure  to  per- 
form some  agreement  on  his  part,  the  title  shall  vest  in  the  mortgagee. 
The  second  and  third  of  these  cases  present  some  points  of  similarity, 
but  in  other  resj>ects  are  dilferent.  In  the  case  of  a  conditional  sale, 
the  title  continues  in  the  original  owner,  and  is  devested  only  upon 
the  hapi)ening  of  the  specified  condition.  In  the  case  of  a  sale,  the 
seller  jiiirts  with  the  title,  and,  if  he  takes  back  a  mortgage,  he  thereby 

30  Parshall  v.  K^'Rcrt,  54  N.  Y.  18;  Blake  v.  Ck^rbolt,  Jliu  N.  Y.  :'.L'7,  i:i  N. 
E.  477. 

•7  Thomas,  Cbut.  .Murlg.  i  2. 


MoimiAcii;,  [■i.i:n(;K,  amj  salk  oistinquisiied.  1'> 

rc;i.(|iiirf's  ;i  iiMTO  lrclini<;il  title,  iiiid  doos  not  reacquire  absolute  title, 
exLH'pt  in  casi?  of  iionpcrforiiiance  by  llic  purciiaser.  But  in  both  cases 
tlu'  n'sult  of  the  transaction  is  to  give  to  the  purchaser  certain  rights 
in  n-spcct  to  the  property,  and  to  leave  certain  other  rights  in  respect 
to  it  in  llie  seller.  If  one  who  owns  property  wishes,  for  example, 
to  dispose  of  it,  but  the  proposed  purchaser  is  not  at  {)r('sent  in  a  posi- 
tion to  jtay  the  price,  and  the  seller  is  willing  to  deliver  tlie  pioperty 
and  wait  for  payment,  if  only  he  can  assure  himself  of  ultimately  hav- 
ing either  the  property  or  the  price,  without  relying  merely  upon  the 
purchaser's  promise  to  |»ay,  he  may  either  deliver  it  to  the  purchaser 
under  an  agreement  that  the  title  should  not  pass  until  the  price  is 
paid,  or  he  may  sell  and  deliver  it,  and  take  back  a  chattel  mortgage 
upon  it,  containing  the  condition  that,  if  the  stipulated  sura  should  be 
paid  by  a  specified  date,  the  mortgage  shall  be  void;  otherwise  to  re- 
main in  full  force  and  effect  In  the  former  case,  if  payment  was  not 
made,  a  seller  would  be  in  the  same  position  as  if  he  had  not  agreed 
to  sell;  while  in  the  latter,  if  the  amount  named  in  the  mortgage  was 
not  i»aid.  he  would  again  own  the  property.  As  between  these  two 
forms  of  the  transaction,  a  distinction  sometimes  exists  under  the 
statutes  relating  to  the  necessity  of  filing  either  chattel  mortgages,  or 
comlitional  bills  of  sale,  or  both.^* 

13.  MORTGAGE,  PLEDGE,  AND  SALE  DISTINGUISHED. 

In  the  case  of  an  absolute  sale,  the  title  passes  to  the  purchaser,  sub- 
ject to  no  condition.  A  conditional  sale  may,  as  already  seen,  be 
conditioned  upon  the  doing  of  some  act  to  the  property  by  the  vendor 
before  the  transaction  is  completed,  as  weighing  or  separating  it  from 
other  property;  or  it  may  be  conditional,  even  though  ready  for  de- 
livery, and  even  though  delivered,  if  the  agreement  is  that  title  is  not 
to  pass  until  the  performance  of  some  condition  by  the  vendee  or  the 
liappcning  of  some  subsequent  contingency.  In  all  these  cases,  title 
docs  not  pass  until  the  condition  is  complied  with,  or  the  contingency 
happens.  In  the  case  of  a  chattel  mortgage,  the  title  passes,  theo- 
reticiilly;  but  no  delivery  is  necessary  to  consummate  the  transaction, 
and  usually  i  lie  mortgaged  goods  are  not  in  fact  delivered.     As  already 

88  IlarkiKba  V.  Huss^ell,  His  U.  S.  003,  7  i?iip.  Ci.  51. 


14  CHAITKI.    MDKTGACiKS. 

SCHMI,  tlic  nitii't.::;i.uor  rt'tnins  some  of  llic  rights  iiuMdml  lo  ow  in'rslii|i; 
such  as  the  rijiht  to  sell,  or  to  pliirc  a  sccuiid  moi  Ij^ajic  on  the  proju'ilv 
subject  to  tlie  first  inortfxa^c,  until  (l»'faull.  al  wliich  lime  the  ahsolutc 
lej^al  title  passt-s  to  the  inorlf^ajree,  suhjecl  itt  an  iMjuitabh'  iij;ht  in  the 
mortgajior  to  rcdccni.  In  i  In-  <  asc  of  a  plnl^c,  (lie  delivei'V  of  the  piop 
erty  to  the  pledgee  is  esseniial.^" 

14.  MORTGAGE,  CONDITIONAL    SALE,  AND  BAILMENT    DIS- 
TINGUISHED. 

''When  the  identical  thinjj:  delivered,  altlKiuuli  in  an  altered  form,  is 
to  be  restored,  the  contract  is  one  of  bailnifiu.  ami  (he  title  to  the 
projK'rty  is  not  chanj^ed;  but  when  there  is  no  oblij;ation  to  restore 
the  specific  article,  and  the  receiver  is  at  liberty  to  return  another 
thing  of  equal  value,  he  becomes  a  debtor  to  make  the  return,  and  the 
title  to  the  property  is  changed;  it  is  a  sale,"  absoluic  or  conditional, 
according  to  the  circumstances."'*' 

15.  FORM  OF  CHATTEL  MORTGAGE. 

A  cliattel  mortgage  is  usually  in  the  form  of  a  transfer  of  the  propiM-ty 
to  the  mortgagee,  his  executois,  administrators,  and  assigns,  specify- 
ing the  goods  mortgaged,  upon  condiiion,  nevertheless,  that  if  the 
mortgagor,  his  heirs,  executors,  administrators,  and  assigns,  shall  and 
do  well  and  truly  pay,  or  cause  to  be  paid,  to  the  nu)rtgagee,  his  exec- 
utors, administrators,  and  assigns,  a  specified  sum  of  money,  or  the 
amoimt  of  specified  obligations,  then  and  in  that  event  the  mortgage 
to  be  void,  otherwise  to  remain  in  full  Utvcv  and  elTect.  It  commonly 
provides,  also,  that  the  mortgagor  shall  insure  the  goods  and  chattels 
mortgaged,  and  keep  them  insured,  against  loss  and  dauutge  by  fire, 
in  a  company  to  be  approved  by  the  mortgagee,  with  the  loss,  if  any. 

»»  Sledcnbach  v.  Riley,  111  N.  Y.  .'.(;<»,  ll>  N.  E.  -JT.".;  People  v.  KlrkpalriiU. 
00  III.  App.  207;  Ward  v.  Lord.  KH)  (Ja.  407.  L'S  S.  E.  44(;;  CauQeld  v.  W.  J. 
iUnih]  &  Co.  (Mich.)  73  N.  W.  550;  Aiiglin  v.  Harlow  (Tox.  Civ.  App.)  45  S. 
W.  827. 

40  \\  riKlit  V.  r.ariiard,  8ft  Iowa,  KKJ.  .'ii;  N.  W.  4124;  Fostor  v.  I'ettiboiu'.  7 
N.  V.  4.T);  Chickeiiii^'  v.  Hastress.  I.*?))  III.  L'OC..  ITJ  N.  K.  .".»•_';  .Mowbray  v. 
Cady.  40  Iowa,  G04;    15iidloiig  v.  Cottrell,  Gl   luwa.  -Sio,  20  N.   \V.   If^;. 


KOUM    Ol-    CIIATTKI,    MOUTGAGK.  1  "> 

]i;i\;ililr  l<>  III''  iiinrl^M;;c<',  ;is  his  iiilncsl  nuiv  ;i|i|M';ir;  mid  tlic  iiiorl- 
j,'i»P'  also  usually  coiilains  special  provisions  a},'ainst  the  rcuKival  of 
the  properly  by  the  niort},'aj,'or  without  the  nioitKiiK^'t^'s  couHcnt,  and 
for  the  retentiou  by  the  moitga};or  of  the  property  mortgaged,  until 
(hfaiiU.  and  for  the  taking  of  the  property  by  the  mortgagee  in  case 
tilt-  iuoi'i;^a;;or  soils  or  assigns  the  same,  and  for  a  sale  thereof,  and  the 
n-lention  oui  of  the  proceeds  of  the  amount  then  uni»aid,  with  the  costs 
and  t  iiarges  of  removing  and  selling  tlie  property,  liut  no  particular 
foiin  is  «'ssen(ial.*'  It  need  not,  for  example,  state  the  s>im  of  money 
for  whirh  it  is  given  as  security,  nor  that  the  mortgagee  shall  have 
the  right  to  take  possession  of  the  goods.  Thus,  the  following  instru- 
ment has  been  held  lo  be  a  chattel  mortgage:  "For  value  received, 
T,  TsMlM'Ila  Corbet  t.  do  hereby  sell  and  assign  the  above  mentioned  and 
described  books  to  Henry  A.  Blake,  his  heirs  and  assigns,  I  to  hold  and 
retain  possession  of  said  books  for  eight  months  from  this  sale;  and  if, 
during  that  period,  the  sum  of  indebtedness  to  said  Blake  now  owing 
to  him  by  Richard  (.'rowley  is  paid  or  satisfied,  for  the  payment  of 
which  this  assignment  is  made  as  security,  then  this  conveyance  shall 
be  null  and  void."  *- 

So.  where  an  instrument  which  was  in  form  an  absolute  bill  of  sale 
contained  a  provision  that  ''it  is  further  understood  and  agreed  by  the 
l)artie8  hereto  that,  if  the  said  party  of  the  first  part  pay  unto  the  party 

of  the  second  part  the  sum  of  ^400,  within from  the  date  hereof, 

the  party  of  the  second  part  agrees  and  will  resell  the  property  men- 
tioned herein,  back  to  the  said  jtarty  of  the  first  part,  and  it  is  further 
understood  and  agreed  by  the  parties  hereto  that  the  property  men- 
tioned herein  and  specified  in  the  schedule  shall  remain  in  the  posses- 
sion of  the  party  of  the  first  part,  he  agreeing  to  pay  the  party  of  the 
second  part  12.50  per  week  for  the  use  of  said  mentioned  prcrperty  in 
his  business";  and  it  appeared  that  the  owner  of  the  propcnty  liad 
applied  for  a  loan  of  money,  offering  to  secure  its  repayment  hy  giving 
a  chattel  mortgage;  that  the  lender  had  refused  to  accept  a  chattel 
ni(ulga;;e.  but  had  accepted  the  instrument  in  question  instead;  and 
that  he  had  acknowledged  that  the  instrument  was  to  be  given  back 

«>nill.(.rt  V.  ItepistiT  Co.,  G7  111.  App.  f,OG;  Smlth-McCord  Dry-(;o<Mls  Co. 
V.  .Tohu  H.  r.iru.ll  Co.  lOkl.)  ."<)  Pac.  149:  Raphael  v.  MuUeu  (Mass.)  50  N. 
E.  515. 

*2  Blake  v.  Coibcll,   IJn  n.  y.  ;;_>7,  24  N.  K.  477. 


1(1  CHATTKI,    MDUTCACKS. 

when  the  money  should  l)(M'<'ii;ii«l  toliiin.  il  wjisluld  that  tlu'S(»  fncts^ 
tak«Mi  in  connei'tion  witli  tlie  provisions  of  the  instriniiont,  conlcniphit- 
rd  a  h)an  of  money  and  a  sale  of  the  property,  upon  the  condilion  that 
the  property  should  be  returned  upon  the  payment  of  the  money  so 
loaned,  and  that  this  was,  in  ellect,  a  chattel  mortgage.*^ 

16.  EFFECT  ON  THE  TITLE  BEFORE  DEFAULT. 

While,  strictly  sjjeaking,  upon  the  execution  of  a  chattel  mortgage, 
a  conditional  legal  title  to  the  jtroperty  is  vested  in  the  mortgagee, 
which  title  is  subject  to  defeasance  by  the  performance  of  the  condi- 
tions contained  in  the  mortgage,  and  title  vests  at  law  in  the  mort- 
gagee, u]»on  default  in  the  payment  of  the  mortgage,  and  thereafter 
there  is  left  in  the  mortgagor  only  an  equity  of  redemption,  this  view 
is  more  technical  and  theoretical  than  practical.  Practically,  the  sub- 
stantial title  remains  in  the  mortgagor,  with  all  the  incidents  of  the 
legal  title.  He  retains  the  use,  control,  and  benefit  of  the  property, 
subject  to  the  mortgage.  If  the  property  is  taken  from  his  posses- 
sion wrongfully  during  the  time  when,  by  the  terms  of  the  mortgage, 
he  is  entitled  to  retain  possession  thereof,  he  may  maintain  an  action 
for  conversion  against  any  wrongdoer,  even  against  the  mortgagee. 
He  can  sell  it,  and  convey  a  good  title,  subject  to  the  mortgage,  to  any 
purchaser;  and  it  may  be  seized  and  sold  by  virtue  of  an  execution 
against  him.**  The  mortgagor  can  sell  the  property,  or  mortgage  itj 
and  a  subsequent  mortgage  of  personal  property  is  not  an  uncommon 
form  of  securit}'.*^ 

43  Susman  v.  Whyard,  149  N.  Y.  127.  43  N.  E.  413.  As  to  what  is  a  suffl- 
cient  description  for  the  niortjiage  to  contain  of  the  chattels  mortgaged,  see 
Williamson  v.  Wylie,  GO  Mo.  A  pp.  3G8;  Wilson  v.  Uustad  (N.  D.)  75  N.  W. 
200;  Desany  v.  Thorp  (Vt.)  39  Atl.  309;  Cragin  v.  Dickey,  113  Ala.  310,  21 
South.  55. 

**  Leadbetter  v.  Leadbetter,  125  N.  Y.  290.  26  N.  E.  2Gr>;  Casscrly  v.  With- 
erbee,  119  N.  Y.  522.  23  N.  E.  1000. 

46  Moore  v.  Supply  Co.,  133  N.  Y.  144,  149,  30  N.  E.  730. 


EKFKCT    ON    TITLK    AKTKIl    DEFAULT,  17 


17.  EFFECT  ON  TITLE  AFTER  DEFAULT. 

After  (I<f;iiili  ill  I  lie  payment  of  the  mortgage,  whatever  title  the 
ni(iil<,M^<>r  lijid  is  vested  Jibsolnfely.  subject  to  the  i-i^'ht  of  redemption 
in  e<|iii(y.  in  the  mortgagee;''*'  and  llieieafter  tlie  mortgagee,  even 
though  his  mortgage  is  a  second  mortgage,  iias  the  same  right  to  sue 
for  a  conversion  of  the  projjerty,  or  an  injury  to  it,  as  the  mortgagor 
wouUl  liave  possessed  if  there  had  been  no  default  in  the  payment. 
This  is  the  result  where  the  first  mortgage  is  not  yet  overdue;  but, 
when  the  title  of  the  first  mortgage  has  become  absolute  at  law,  the 
secoixl  moi'tgagee  cannot  thereafter  sue  for  conversion."'^ 

When  default  is  made  in  the  payment  of  the  debt  secured  by  a  mort- 
gage on  personal  i)roperty,  the  legal  title  to  the  property  becomes 
vested  in  the  mortgagee;  and  thereafter  the  mortgagor  or  any  one 
holding  his  title  has  but  an  e(iuitable  right  of  redemption,  and  he  can 
accordingly  tiansfer  no  greater  light  to  his  assignee.*® 

Where  default  has  been  made  in  the  payment  of  a  first  mortgage 
before  the  second  is  executed,  and  in  the  second  before  the  third  is 
executed,  the  last  two  mortgages  transfer  nothing  but  the  equity  of 
redemption,  bet;ause  the  legal  title  has  become  vested  in  the  first 
mortgagee,  who  could  at  any  time  assert  that  title  by  taking  the  prop- 
erty into  his  possession.  But  while  the  holder  of  a  first  mortgage, 
after  default  in  payment  of  his  debt,  becomes  vested  with  the  legal 
title,  yet,  so  long  as  he  does  not  take  possession,  he  does  not  acquire 
all  the  rights  nor  subject  himself  to  all  the  duties  and  responsibilities 
of  owner.  So  long  as  the  possession  of  the  mortgagor  is  not  dis- 
turbed, the  mortgagor  is  entitled  to  receive  the  earnings  of  the  prop- 
erty, if  any,  and  is  liable  for  repairs,  and  for  the  discharge  of  the 
duties  and  obligations  incident  to  ownership;  and  the  mortgagee, 
tliough  having  the  legal  title  after  default,  is  not  charged  wath  any 
such  obligations,  in  the  absence  of  express  contract,  until  he  assumes 

*o  .Martiu  v.  .Iciikins.  51  .S.  C.  42,  27  .S.  K.  1)47;  Trustees  of  Ashland  Lodjjre 
V.  Williams  (Wis.)  7.".  N.  W.  054. 

*■!  Mooro  V.  Supply  Co.,  l:^•.^  N.  Y.  144.  30  N.  E.  730;  lYeat  v.  Gilmore,  40 
Me.  34;    Kint,'  v.  Neale,  114  Mass.  111. 

<8  Kimball  v.  Bauk,  138  N.  Y.  500,  5U4,  34  N,  E.  337 
COND.S.— 2 


1  "^  CHATTKl.    MOItTIJAlJKS. 

thi'in  l\v  t;il;injj:  jiossession,  and  Ihcn  he  bccoinos  onlided  to  receive 
the  oarniuns  of  the  property,  if  any.** 

If  a  luort^ap'e  holding  a  inorliia^ic  upon  sevci-al  chatlels  continut's 
to  sell  after  he  has  reali/ed  enough  to  satisfy  the  debt  and  costs,  he 
iK'foiiics  a  ircspasser.'**' 

18.   CHATTEL  MORTGAGE  ON   NONEXISTENT  PROPERTY. 

A  nioi't^a^c  cannot  be  •;ivtn  clVcct  at  law  as  a  lien  upon  personal 
property  wliicli.  at  th<»  time  of  its  (h'liverv.  was  not  in  existence, 
eitiier  actually  or  potentially,  when  the  riulits  of  creditors  intervene. 
At  law.  such  a  mortj^age  must  be  conceded  to  be  void.  The  mortgage 
c(»uld  have  no  positive  opeiation  to  transfer  in  pra^st^iti  property  not 
in  esse.  But  it  may  operate  l>y  way  of  a  personal  contract  between 
the  jiarties  that  the  cre<litor  should  have  a  lien  npon  the  property  to  be 
snl)s«'qnently  acipiired  l>y  his  debior,  which  ('(juity  will  enforce  as 
against  the  latter.^^ 

Even  where  a  chattel  moitgage  ojierates  as  an  executory  agreement 
to  give  a  lien  when  the  property  comes  into  existence,  some  further  act 
is  necessary  in  order  to  make  it  actual  and  effectual  as  against  credit- 
ors. If  no  further  act  is  done  by  the  ]>arties  to  the  instrument,  to 
create  such  an  actual  lien,  the  levy  of  an  execution  upon  the  property 
by  a  creditor  of  the  mortgagor  operates  to  transfer  the  ])osse8sion 
from  the  owner  to  that  of  the  sheritf.  As  against  his  possession,  the 
equities  of  the  nn)rtgagee  ;ire  unavailing  for  any  purpose.^- 

<»  Kiiiihnll  V.  liaiik,  l.".S  N.  V.  .")00.  .">o."..  .;»  X.  Iv  .••.:'.T;  Wilson  v.  Wilson,  !>. 
R.  14  p:q.  4U;  Brown  v.  'raiiiuT.  :;  (Mi.  A\>\>.  .V.iT;  Liverpool  Marine  Credit  Co. 
V.  Wil.son.  7  Cli.  App.  .'(OT. 

ooo'Kourke  v.  Iladcock.  114  N.  Y.  r.41.  .".4!t.  liJ  N.  K.  .T.. 

61  RoclR'ster  Distilling  Co.  v.  Uasey,  14U  N.  Y.  570,  :{7  N.  E.  CuV2:  Hank  of 
Lunslugburgh  v,  Crary.  1  Bar!).  (N.  Y.)  542;  Electric  I-lglitiug  Co.  of  Mobilf 
v.  Ilust  (Ala.)  *J:'.  Sontli.  751;  Standard  Brewery  v.  Nudehnan.  70  111.  App. 
.^5<;;  Otis  V.  Sill.  S  Barh.  (N.  Y.)  102;  (Jardncr  v.  MeEwen,  l!l  N.  Y.  12.'{; 
Kribbs  V.  Alford.  120  N.  Y.  510.  24  N.  E.  811.  Compare  Allen  v.  .Mannfac- 
tiirlng  Co..  87  Fed.  7Sfi;  Alnswortli  v.  Trading  Co.  (Ca.)  2;>  S.  E.  142;  Snow 
V.  rimer.  !H>  Me.  .".24.  ."iO  Atl.  '.W,;  Midland  Slate  Bank  v.  Kili>atrlek-Koeh 
I)ry-<;oodK  Co.  (Neb.)  74  N.  W.  S.!7;    Kane  v.  Lodor  i.N.  .1.  Cli.l  .'{H  .\tl.  5M'>0. 

f'-'  Hoclicsfei-  Distilling  Co.  v.  Bascy.  142  N.  Y.  570.  ;',7  .\.  lO.  (►.•.2.  Compare 
Holroyd  v.  .Marsball.  10  H.  T-.  ('as.  201);  McCalTrey  v.  Woodlu,  05  N.  Y.  450; 
MiH)i\y  V.  Wriglit,  l.'.  Mete.  (.Mass.j  17. 


THK    IIKJIIT    OF    POSSESSION.  19 

Where  a  moi  l;;jif;e  covers  chattolp  in  exist  cue*'.  :iik<l  ;i1ho  professes  to 
•  over  property  which  the  mortj;af,'()r  may  therj'aflcr  purchase,  the 
fact  that  it  is  invalid  as  to  property  of  the  hitter  chiss  does  not  render 
it  invalid  as  to  the  existent  property  which  is  specified  in  it.''^ 

itnl  il  is  not  nec<'ssary  that  property,  in  oidei'  to  !»<■  a  subject  of  a 
chattel  niortt^ajje,  slionld  be  in  actual  exist«,'nce.  It  is  enouj^h  that  it 
has  a  potential  or  possible  existence,  a.s,  for  example,  in  the  case  of  the 
KpontaiH'ouH  product  of  the  earth,  or  the  increase  of  that  which  is  in 
existence.  In  such  a  case  the  right  to  it,  when  it  comes  into  existence, 
is  regarded  as  a  present  vested  right."* 

So,  also,  in  cases  arising  between  a  lessor  of  lan<l  and  his  lessee,  a 
principle  different  from  that  generally  applicable  might  operate  to 
tieate  a  lieu  of  the  landloi-d  upon  the  crops  as  they  come  into  existence 
upon  the  huid.  The  title  to  the  land  being  in  him,  an  agreement 
between  him  and  the  lessee  for  a  lien  upon  the  crops  to  be  raised,  to 
wcure  the  payment  of  the  leni.  would  operate  and  be  given  legal  effect 
as  a  reservation,  at  the  tiint\  of  the  title  to  the  product  of  the  land.'^'' 


19.   THE  RIGHT  OF  POSSESSION. 

As  the  execution  of  a  chattel  mortgage  invests  the  mortgagee  with 
title  subject  to  be  defeated  by  subsequent  i)erformauce  of  the  condi- 
tion, the  right  of  possession,  which  ordinarily  follows  that  of  property, 
would  pass  with  the  title,  under  the  transfer,  in  the  absence  of  any 
express  oi-  implied  agreement  for  the  retention  of  the  goods  by  the 
mortgagoi'.  But  it  is  not  necessary  that  such  an  agreement  should 
be  expi-essed  in  terms;  it  may  be  implied  from  the  provisions  of  the 
instrument.  Thus,  where  the  mortgage  defines  the  circumstances  un- 
der which  the  grantee  shall  become  entitled  to  the  right  of  possession, 

»»  (J.irdner  v.  McHwen,  19  N.  Y.  123. 

«•♦  «;r:inth:iin  v.  Hawle.v.  Hob.  132;  Rochester  Distilling;  Co.  v.  Rnsey.  142 
N.  Y.  r)7U.  37  N.  K.  G32;   Dcsany  v.  Thorp  (Vt.)  39  Atl.  309. 

f'S  Andrew  v.  Ncwenmli.  32  N.  Y.  417;  Mc-Caffrey  v.  \Voodin.  C,5  N.  Y.  459; 
Butt  V.  Ellott.  19  Wall.  544.  And  see  Lemon  v.  WolfT  (Cal.)  .")3  Pac.  801; 
llopan  V.  Elevator  Co..  66  Minn.  344,  69  N.  ^^  .  1.  As  to  mortgages  given  by 
railroad  coniiianies  to  cover  future  acquired  rolling  stock,  etc.,  see  Jones, 
Mortg.  $§  152-154,  452. 


20  CHATTII.    MORTGAGES. 

it  may  ovincp  the  imiliial  in  I  cut  uf  ilir  [lariics  tlial,  iiiiiil  it  vests  in  tlie 
uu>rt}^agee.  possession  shall  H'Miain  in  ihr  inuri;^a^()r."^'' 


20.  FRAUDULENT  CHATTEL  MORTGAGES. 

Xiinu'Ktiis  aulhorifies  deal  with  the  snhjrct  of  niiirl;,Mj^('S  which, 
either  upon  their  faee  or  in  connection  with  a  contcnijioraneous  oral 
agreement  between  the  parties,  are  intended  to  authorize  the  mort- 
gagor to  continue  to  sell  or  otherwise  to  deal  with  the  projuM'ty  as  his 
own. 

It  is  ohviotis  that  such  an  arrangement  is  strongly  indiiative  of  an 
intention  to  give  a  false  credit  to  the  mortgagor.  Chattel  mortgages 
were  formerly  in  most  of  the  states  treated  as  invalid,  unless  actual 
possession  was  surrendered  to  the  mortgagee;  but  it  is  not  so  now, 
for  modern  legislation  has  as  a  general  thing  (the  cases  to  the  contrary 
being  exceptional)  conceded  the  right  to  the  mortgagor  to  retain  pos- 
session if  the  transaction  is  for  a  good  consideration,  and  bona  tide. 
This  concession  is  in  ol)e<lience  to  the  wants  of  trade,  which  deem  it 
beneficial  to  the  community  that  the  owners  of  personal  property 
should  be  able  to  make  bona  fide  mortgages  of  it,  to  secure  creditors, 
w  ithout  any  actual  change  of  possession.  But  the  creditor  must  take 
care  in  making  his  contract  that  it  does  not  contain  provisions  of  no 
advantage  l(t  him.  ])nt  which  bciietit  the  debtor,  and  wer(^  designed  to 
do  so,  and  involve  iujtnies  to  other  creditors.  The  law  will  not  sanc- 
tion a  proceeding  of  this  kind.  It  w  ill  not  allow  the  creditor  to  make 
use  of  his  delit  for  any  purpose  other  than  his  own  indemnity.  If  he 
goes  beyond  this,  and  puts  into  the  contract  stipulations  which  have 
the  effect  to  shield  the  property  of  his  debtor,  so  that  creditors  are 
delayed  in  the  collection  of  their  debts,  a  court  of  e(]uity  will  not  lend 
its  aid  to  (Miforce  the  contract.  These  i)rinciples  are  not  disputed,  but 
the  courts  of  the  cotmtry  are  not  agreed  in  their  ai>plication  to  mort- 
gages. The  cases  cannot  be  reconciled  l»y  any  piocess  of  reasoning, 
or  on  any  i»iinci|tles  of  law.  It  is  not  ditlicult  to  sec  that  the  mere 
retenlioi»  of  use  of  personal  property  until  default  is  altogether  a 
ditTer<nl  thing  from  the  retention  of  |)ossession  acconi|tanied  witii  a 
[luwei    to  dispos*'  f)f  it  for  the  benefit  of  the  mortgagor  alone.      The 

'0  ilall  V.  .^aiup.suu,  :>0  N.   V.  :^74. 


KllAUOI'I.KNT    CHATTKL    MORTGAGES. 


21 


foniirr  is  fiv.|iirn(l\  jin mil  led  by  statiilr.  is  coiisistriil  willi  (li<-  i<l<'Ji 
of  st'CMii-ily.  ami  may  bo  for  the  accoiiiiiiodation  of  the  morlj^a^^Mi; 
but  (he  lallcr  is  iiiconHislont  with  the  iiahiri'  ainl  cliaraclor  of  a  mort- 
gagee, iH  not  for  the  protection  of  the  mort;,'ageo,  and  of  itself  furnishes 
a  shield  to  a  dishonest  debtor.  Where  such  a  morlga{,'ee  permits  the 
morl},'ap>i'  not  only  to  continue  in  possession,  but  to  dispose  of  the 
property,  sell  it  at  retail,  and  use  the  money  obtained  to  replenish  his 
stock,  and  there  is  no  covenant  to  account  with  the  mortgagee,  nor 
any  recognition  that  the  projjorty  is  sold  for  the  latter's  benefit,  the 
manifest  object  of  it  is  to  entitle  the  mortgagor  to  continue  his  busi- 
ness, and  appear  to  the  world  as  the  absolute  owner  of  the  goods,  and 
enjoy  all  the  advantages  resulting  therefrom.  Where  the  instrument 
on  its  face  shows  that  the  legal  effect  of  it  is  to  delay  creditors,  the  Livv 
imputes  to  it  a  fiaudulent  purpose.'^ 

In  order  to  invalidate  a  mortgage  because  of  its  authorizing  the 
mortgagor  to  dispose  of  the  property  generally  for  his  own  benefit, 
it  is  not  necessary  that  such  an  authorization  should  be  contained  in 
terms  in  the  mortgage.  The  arrangement  may  be  shown  by  an  oral 
agreement  between  the  parties,  and  this,  in  turn,  may  be  established 
by  evidence  of  a  course  of  dealing  between  the  parties  in  accordance 
with  which  the  mortgagor  would  be  entitled  thus  to  deal  with  the 
mortgaged  chattels.'^^ 

So,  also,  if  the  mortgage  contains  merely  an  inhibition  upon  the 
mortgagor's  s«'lling  "on  credit."  he  is,  by  a  necessary  implication,  an 
thorized  to  sell  for  cash;  and  this  fact,  together  with  other  circumstan- 
ces showii^  the  intention  that  he  may  continue  to  retail  the  mortgaged 
property  and  receive  the  proceeds  to  his  own  use,  may  suffice  to 
render  the  mortgage  void  as  against  creditors;  and  where  such  is  the 
effect  of  the  written  instrument,  and  there  is  no  doubt  what  the  lan- 
guage means,  the  mortgage  is  void,  as  matter  of  law;  and,  as  the  court 
would  be  obliged  to  set  aside  a  verdict  confirming  its  validity  as  often 
as  one  should  be  rendered,  the  question  of  fraud  need  not  be  submitted 
to  the  jury."  And  if,  for  the  reasons  now  under  consideration,  a  mort- 
gage is  void  ajs  to  a  portion  of  the  property,  it  is  fraudulent  as  to  all 

6T  Robinson  v.  Elliott,  22  Wall.  51^:  Freeman  v.  Kawson,  5  Ohio  SL  1; 
Barnet  v.  Fergus,  51  111.  352. 

•"  Gardner  v.  McEwen,  19  N.  Y.  IJri. 
"  Edgell  V.  Hart.  9  N.  Y.  2111. 


22  CHATTEL    MORTGAGKS. 

ilir  prtijit'ily  covered  by  the  inort.mi^^'c;  for  \ho  inoit;j:aj;o  is  ono  slnj^lc 
instiunient.  j^iven  to  sccnro  on(>  d(»ht,  and,  to  render  it  valid,  it  must 
havo  b(^on  jjivon  in  irood  faith,  and  for  the  lionost  purpose  of  socnring 
lliodeltt,  and  wiiliout  any  intent  to  liinder  or  defiaiid  creditors.  This 
eannot  he  true  when  the  object  in  pari  or  as  to  part  of  tlie  property  is 
to  defraud  cieditors.  Tlie  unhiwfiil  desi;;ii  sitiales  tlie  entire  instru- 
ment.*'" 

Rut,  notwithstanding  the  foregoing  propositions,  it  is  still  true  that 
a  cliattel  mortgage  is  not  per  se  void  because  of  a  provision  contained 
in  it  allowing  the  mortgagor  to  sell  the  mortgaged  property;  for  if 
the  agre<'nient  is  that,  as  ho  sells  it  himself,  he  is  to  account  to  the 
mortgagee  for  the  proceeds,  and  apply  them  on  the  mortgage  debt, 
it  is  unobjectionable.  Such  a  sale  and  application  of  proceeds  is  the 
normal  and  proper  purpose  of  a  chattel  mortgage,  and  within  the  pre- 
cise boundaries  of  its  operation  and  elTect.  It  does  no  more  than  to 
substitute  the  mortgagor  as  the  agent  of  the  mortgagee,  to  do  exactly 
what  the  latter  had  the  right  to  do,  and  what  it  was  his  privilege  and 
duty  to  accomplish.  It  devotes  the  mortgaged  property  to  the  pay- 
ment of  the  mortgage  debt.  If  the  mortgagor  sells,  and  actually  pays 
over  the  whole  proceeds,  nobody  is  harmed;  for  that  only  has  hap- 
jK'ned  which  is  the  proper  and  lawful  operation  of  the  mortgage.  If, 
on  the  other  hand,  under  such  an  arrangement,  such  proceeds  have 
not  been  paid  over,  the  adverse  lien  is  still  unharmed;  for,  as  against 
it,  such  proceeds  are  deemed  paid  over  and  applied  in  reduction  of  the 
mortgage  debt,  although,  as  between  the  mortgagor  and  mortgagee, 
the  debt  remains  and  is  still  unpaid.®^ 

21.  FILING  AND  REFILING. 

It  is  frequently  provided  by  statute  that,  where  the  mortgagor  re- 
tains possession'^  of  mortgaged  chattels,  the  mortgage  shall  be  void 

•0  Russell  V.  Winiic.  .'57  N.  Y.  51>1. 

«i  Brackett  v.  Ilarvpy,  01  N.  Y.  214;  Rohiiison  v.  Elliott.  22  Wall.  524; 
Mansur  &  T.  Imp.  Co.  v.  lieonian-St.  Clair  ("o.  (Tox.  Civ.  App.)  45  S.  W.  721); 
Ufford  v.  Winchester,  i\U  Vt.  TA'J,  38  All.  2;}1). 

«2  Drury  v.  Moors  (Mass.)  r>0  N.  K.  (51S;  Hurchinell  v.  Schoyer  (Colo.  App.) 
.'iO  rac.  217;  MarUn  v.  Sexton,  72  111.  App.  3D0;  Sclineitler  v.  Kraby,  97  Wis. 
510,  73  N.  W.  01. 


FILING    AND    np:FILING.  -> 

as  a;;jnnsf  liis  cicdilors,  and  as  against  siibsoquont  pinchasors  and 
Uiort^'agcrs  in  tjood  faidi,  unless  flic  niorl^'ago  is  lih'd;  and  it  is  coni- 
nionl}-  provided,  furtlier,  that  it  innsl  l)e  refded  from  time  to  time  in 
order  to  continue  it  in  foice.  An  iliiislration  of  sncli  Klatnl<\s  is 
found  in  the  New  York  lien  law,"''  by  wliich  it  is  provided  (seel ion  00) 
that  "every  mortgage  or  conveyance  intended  to  operate  as  a  mortgage 
of  goods  and  chattels,  or  of  any  canal  boat,  steam  tug,  scow  or  other 
craft,  or  the  appurtenances  thereto,  navigating  the  canals  of  the  state, 
which  is  not  accompanied  by  an  immediate  delivery,  and  foll<>wed  by 
an  actual  and  continued  change  of  possession  of  the  things  mortgaged, 
is  absolutely  void  as  against  the  creditors  of  the  mortgagor,  and  as 
against  subsequent  purchasers  and  mortgagees  "*  in  good  faith,  unless 
the  mortgage,  or  a  true  coj)y  thereof,  is  filed  as  directed  in  this  article." 

"Mortgages  creating  a  lien  upon  real  and  personal  property,  executed 
by  a  corporation  as  security  for  the  payment  of  bonds  issued  by  such 
cori)oration  or  by  any  telegraph,  telephone,  or  electric  light  corporation, 
and  recorded  as  a  mortgage  of  real  property  in  each  county  where  such 
property  is  located  or  through  which  the  line  of  such  telegraph,  tele- 
phone, or  electric  light  corporation  runs,  need  not  be  filed  or  refiled  as 
chattel  moitgages."  "' 

"An  instrument,  or  a  true  copy  thereof,  if  intended  to  operate  as  a 
mortgage  of  a  canal  boat,  steam  tug,  scow  or  other  craft,  or  of  the 
appurtenances  thereof,  navigating  the  canals  of  this  state,  must  be 
tiled  in  the  office  of  the  comptroller,  and  need  not  be  filed  elsewhere. 
Every  other  chattel  mortgage  or  an  instrument  intended  to  operate  as 
such,  or  a  true  copy  thereof,  must  be  filed  in  the  town  or  city  where 
the  mortgagor,  if  a  resident  of  the  state,  resides  at  the  time  of  the 
execution  thereof,  and  if  not  a  resident,  in  the  town  or  city  where 
the  property  mortgaged  is,  at  the  time  of  the  execution  of  the  mort- 
gage. If  there  is  more  than  one  mortgagor,  the  mortgage,  or  a  cer- 
tified copy  thereof,  must  be  filed  in  each  city  or  town  within  the  state 
where  each  mortgagor  resides  at  the  time  of  the  execution  thereof. 
In  the  city  of  New  York,  such  instruments  must  be  filed  in  the  office 
of  the  register  of  the  city  and  county  of  New  York;  in  the  city  of 
Brooklyn,  in  the  office  of  the  register  of  the  county  of  Kings,  and 

«•■«  Laws  18J)T,  c.  41S,  §§  1)0-IH>. 

•*  Wolf  V.  Rnusch.  22  Misc.  Rep.  108,  48  N.  Y.  Sui)i).  TIG. 

•5  Laws  189T,  c.  418.  §  01. 


24  CHATTKL    MORTGAGES. 

in  t'vcry  otlior  city  or  town  of  th(>  state,  in  the  ofVico  of  the  city  or 
town  clerk,  unless  there  is  a  county  clerk's  oflice  in  such  city  or  town, 
in  wliich  case  it  must  be  filed  therein.""' 

A  ft  IT  further  jjrovidin^,  in  section  Oli,  for  the  nielluxl  of  lilinji  and 
indexiuii  chat  lei  niort^a^es,  and,  in  section  1)4,  for  the  olBcial  fees, 
llie  act  proceeds  to  provide,  in  section  1)5,  that  "a  chattel  niortjxage, 
except  as  otherwise  provided  in  this  article,  shall  he  invalid  as  against 
creditors  of  the  niort}2;agor,  and  aj^jainst  subsequent  purchasers  or 
creditors  in  good  faith,  after  the  expiration  of  the  first  or  any  existing 
term  of  one  year,  reckoning  from  the  time  of  tlie  first  fding,  unless 
(1)  within  30  days  next  preceding  the  expiration  of  each  such  term, 
a  statement  containing  a  description  of  such  mortgage,  the  names  of 
the  parties,  the  time  when  and  place  where  filed,  the  interest  of  the 
mortgagee  or  of  any  person  who  has  succeeded  to  his  interest  in  the 
property  claimed  by  virtue  thereof,  or  (2)  a  copy  of  such  mortgage  and 
its  endorsements,  together  with  a  statement  attached  thereto  or  en- 
dorsed thereon,  showing  the  interest  of  the  mortgagee  or  of  any 
person  who  has  succeeded  to  his  interest  in  the  mortgage,  is  tiled  in 
the  proper  office  in  the  city  or  town  where  the  mortgagor  then  re- 
sides, if  he  is  then  a  resident  of  the  town  or  city  where  the  mortgage 
or  a  copy  thereof  or  such  statement  was  last  filed;  if  not  such  resident, 
but  a  resident  of  the  state,  a  true  copy  of  such  mortgage,  together 
with  such  statement,  shall  be  filed  in  the  proper  office  of  the  town  or 
city  where  he  then  resides;  and  if  not  a  resident  of  the  state,  then 
in  the  proper  office  of  the  city  or  town  where  the  property  so  mort- 
gaged was  at  the  time  of  the  execution  of  the  mortgage." 

It  will  be  noticed  that,  while  the  statute  prescribes  how  and  where 
chattel  mortgages  shall  be  filed,  it  does  not  in  terms  prescribe^  the 
time  within  which  this  is  to  be  done.  While  the  act  does  not  in 
terms  require  an  immediate  filing,  its  purpose  can  only  be  satisfied 
by  prompt  and  diligent  action  on  the  part  of  the  mortgagee  in  filing 
his  mortgage.  Some  time,  of  course,  will  necessarily  elapse  between 
the  execution  and  tiling  of  tiie  mortgage.  Where  it  appears  tliat  due 
diligence  was  exercised  in  filing  tiie  mortgage,  and  there  has  been 
no  unnecessary  delay,  and  no  actual  intervening  lien  has  been  ac- 
quired, there  would  seem  to  be  no  grouinl  ui)on  which  subsequent 
lienholders  could  question  the  validity  of  the  mortgage.     But  a  delay 

««  111.  i  'J2. 


FORECLOSURE.  -'^ 

of  six  wr.ks  in  liliii;:  liiis  boon  liold  not  to  be  a  compliance  witli  the 
foiiiHT  sliiHitc  on  this  siibjoct,  wlioro  tlioro  were  no  circumstancGS 
ivndci  inj;  so  h.iijj;  a  dchiy  nticossiuy,  oven  though  it  is  filed  before  the 
creditor's  rights  have  attached." 

22.  THE  RIGHT  TO  REDEEM. 

Although,  upon  the  mortgagor's  default,  the  absolute  legal  title 
to  the  propoity  vests  in  tlie  mortgagee,  yet  the  mortgagor  has,  as 
already  s(at<(l.  an  equitable  right  to  redeem  until  the  mortgagee  has 
foreclosed  it.  Tliis  right  lie  may  enforce  by  suit,  after  first  paying  or 
tendering  the  full  amount  due.*^* 

The  relief  sought  may  be  either  the  return  of  the  property,^^  or, 
if  the  property  has  in  the  meantime  been  illegally  sold  by  the  mort- 
gagee, a  recovery  of  the  value,  less  the  amount  of  the  mortgage  debt ;  ""* 
while,  if  the  sale  has  been  lawful,  the  mortgagor  may  recover  the  sur- 
plus.'^ llie  right  to  redeem  may  be  exercised  by  the  mortgagor,  or 
by  any  one  who  has  a  title  to  or  lien  on  the  property  under  or  through 
the  mortgagor. '- 

23.  FORECLOSURE. 

Inasmuch  as.  after  default,  and  after  the  mortgagee  has  taken 
])OSsessiou,  the  mortgagor  retains  the  equitable  right  of  redemp- 
lion,  the  mortgagee  is  on  his  part  afforded  means  of  extinguishing 
ihis  right,  and  having  the  respective   rights  of  the  parties  finally 

87  Karst  V.  Gane,  13G  N.  Y.  31G,  32  N.  E.  1073;  Ledoux  v.  Silk  Co.,  19  Misc. 
Rep.  440,  44  X.  Y.  Supp.  489;  Stephens  v.  Meriden  Britannia  Co.,  13  App. 
Div.  268,  43  N.  Y.  Supp.  226.  And,  as  to  refiling,  in  general,  see  Stevenson 
Brewing  Co.  v.  Eastern  Brewing  Co.,  22  App.  Div.  523,  48  N.  Y.  Supp.  89; 
William  Deering  &  Co.  v.  Hanson  (N.  D.)  75  N.  W.  249;  Beskin  v.  Feigenspan 
(Sup.)  52  N.  Y.  Supp.  7.50. 

6  8  Porter  v.  rarmley.  52  N.  Y.  185;  Lambert  v.  Miller,  38  N.  J.  Eq.  117; 
Stoddard  v.  Deuison,  2  Sweeny  (N.  Y.)  54;  Noyes  v.  WyckoCf,  30  Hun  (N.  Y.) 
466;  Brush  v.  Evans,  53  N.  Y.  Super.  Ct.  523;   Ooe  v.  Cassidy,  72  N.  Y.  133. 

«»  Porter  v.  Parmley,  58  N.  Y.  1S5. 

TO  St<Hldard  v.  Denison.  2  Sweeny  (N.  Y.)  54. 

•  1  Davenport  v.  McChesney.  86  N.  Y.  242. 

72  Hinman  v.  Judson,  13  Barb.  (.N.  Y.)  6L1>;  Pettibone  v.  Drakeford,  37  Hun 
(N.  Y.)  628. 


26  CHATTEL    MORTGAGES. 

adjusted.  This  suhjoct  is  froquently  rejj:nlatod  by  statute.  Tn  most 
oases,  however,  the  nioit^M^^ce  may  foreclose  either  by  action,  or,  in 
some  cases,  by  sale.  An  action  lies  in  ((juity  to  foreclose  a  chattel 
mortgage;  but  the  remedy  by  sale,  under  the  power  contained  in  the 
mortgage,  is,  in  most  cases,  a  more  speedy  and  effectual  means  of 
extinguishing  the  equity  of  redemption.  But  the  right  to  foreclose 
by  action  has  not  been  taken  away.''* 

The  New  York  Code  of  Civil  Procedure,  by  sections  1737  to  1740, 
provides  for  actions  "to  foreclose  a  lien  upon  a  chattel";  but  by  sec- 
tion 1741  it  is  provided  that  these  sections  do  not  ailcct  any  existing 
right  or  remedy  to  foreclose  or  satisfy  a  lien  upon  a  chattel  without 
action;  and  it  does  not  apply  to  a  case^*  where  another  mode  of  en- 
forcing a  lien  upon  a  chattel  is  specially  prescribed  by  law.""* 

Taking  possession  of  mortgaged  chattels,  and  selling  them,  prior  to 
the  contingencies  mentioned  in  the  mortgage  upon  which  the  mort- 
gagee may  proceed  to  foreclose,  amounts  to  a  conversion  J* 

24.  DISCHARGE  OF  MORTGAGE. 

Where  statutory  provisions  are  made  for  the  filing  of  chattel  mort- 
gages, the  statutes  also  provide  the  method  of  discharging  such  mort- 
gages of  record.  Thus,  by  the  New  York  statute  ' ^  it  is  provided  that, 
"upon  the  payment  or  satisfaction  of  a  chattel  mortgage,  the  mort- 
gagee, his  assignee  or  legal  representative,  upon  the  request  of  the 
mortgagor  or  of  any  person  interested  in  the  mortgaged  property,  must 
sign  and  acknowledge  a  certificate  setting  forth  such  payment  or 
satisfaction.  The  officer  with  whom  the  mortgage,  or  a  copy  thereof, 
is  filed,  must,  on  receipt  of  such  certificate,  file  the  same  in  his  office, 
and  write  the  word  'Discharged'  in  the  book  where  the  mortgage  is 
entered,  opposite  the  entry  thereof;  and  the  mortgage  is  thereby 
discharged." 

T8  Rriggs  V.  Oliver,  C8  N.  Y.  Snc,  :;:«). 

1*  As,  for  example,  a  mechanic's  lieu,  or  lions  on  vessols.     Code  Civ.  Phk'. 

51  3398-3441. 

75. See,  also.  McCarthy  v.  Hetzner,  70  lU.  App.  4S0;    Brook  v.  Bayless  (Okl.) 

52  Pac.  738;    Desany  v.  Thorp  (Vt.)  39  Atl.  309;    Le.xiuglou  Bank  v.  Wirges, 
52  Neb.  049,  72  N.  W.  1049. 

T«  .Tohiiston  v.  Itobuck,  104  Iowa.  .VJ3,  73  ^.  W.  1002. 
7  7  Llfu  Law,  Laws  1897,  c.  418.  §  US. 


BALES   TO    AKUIVE.  27 


SALES  TO  ARRIVE. 


25.  IN  GENERAL. 


Sales  "to  arrive"  are  frequently  made,  and  "it  is  not  always  easy  to 
determine  in  given  instances  whether  the  language  used  implies  a 
condition  or  not,  or  what  the  real  condition  is."  ''* 


26.   NATURE  AND  CHARACTERISTICS. 

But  in  a  proper  case  of  a  sale  "to  arrive,"  apart  from  any  additional 
and  peculiar  provisions,  the  contract  is  both  conditional  and  execu- 
tory. Certainly  until  arrival,  the  title  to  the  goods  does  not  pass  to 
the  vendee,  and  it  may  be  that  it  does  not  pass  until  the  goods  are 
delivered.^® 

The  contract  is  conditional  as  to  both  parties,  and  if  the  vessel  does 
not  arrive,  or  if,  though  it  arrives,  the  goods  are  not  on  board,  the 
<:on tract  is  at  an  end.  So,  if  a  part  only  of  the  goods  arrive,  the  seller 
would  not  be  bound  to  deliver  nor  the  purchaser  to  accept  it.  The 
same  result  follows  if  goods  of  the  same  general  description,  but  not 
of  the  stipulated  quality,  arrive.^" 

These  propositions  rest,  of  course,  upon  the  assumption  that  there 
is  no  warranty  by  the  seller  that  they  shall  arrive,  or  that,  arriving, 
they  shall  be  of  a  particular  quality;  for,  if  such  a  warranty  is  made, 
he  is  liable  thereon.*^     And  the  same  principle  applies  where,  in  a 

7  8  Beuj.  Sales,  §  578. 

7  8  Benedict  v.  Field,  IG  N.  Y.  595,  597. 

80  O'Douohue  V.  Leggett,  134  N.  Y.  40,  31  N.  E.  269;  Clark  v.  Fey,  123  N. 
T.  470.  24  N.  E.  703. 

81  Shields  v.  Pettie,  4  N.  Y.  122;  Boyd  v.  SifiEkin,  2  Camp.  326;  Alewyn  v. 
Pryor,  1  Kyan  ^Vc  M.  406;  Ix)vatt  v.  Hamilton,  5  Mees.  &  W.  639;  Johnson  v. 
Maedouahl.  9  Mees.  &  W.  600;   Russell  v.  KicoU,  3  Wend.  (N.  Y.)  112. 


'-'8  SALES    TO    AFtRIVE. 

coutract  for  sale  of  goods  to  arrive,  it  is  stipulated  that  they  shall 
be  equal  to  sample.*- 

Other  conditions  besides  the  "arrival"  of  the  goods  may  be.  and 
frequently  are,  introduced  into  the  coutract;  as,  for  example,  lliat 
Ihcy  shall  be  shipped  by  a  particular  vessel,  or  a  ])artit  ular  route,  or 
that  they  shall  arrive  in  a  particular  vessel,  or  that  thi*  goods  sold 
"to  arrive"  shall  be  of  a  particular  quality.  But  a  provision  that  the 
sale  is  of  goods  "to  be  shipped  by"  a  specified  vessel,  "no  arrival,  no 
sale,"  refers  to  the  arrival  of  the  goods,  and  not  to  the  arrival  of 
the  vessel  named;  and  it  is  not  to  be  inferred  that  the  goods  must 
arrive  in  that  vessel;  ^^  and  in  this  respect  such  a  contract  differs  from 
a  sale  of  goods  "to  arrive  by"  or  "on  arrival  of"  a  sliip  named,  as 
in  Lovatt  v.  Hamilton,®^  Johnson  v,  ]\racdonald,^'^  and  Hale  v.  Raw- 
son.^® 

82  Dike  V.  Reitlinger,  23  Hun  (N.  Y.)  241;  Siiuond  v,  Braddon.  2  C.  B.  (N.  S.) 
324;   Jones  v.  Just,  L.  R.  3  Q.  B.  197;   Cleu  v.  McPlierson,  1  Bosw.  (N.  Y.)  480. 

8  3  Harrison  v.  Fortlage.  101  U.  S.  oT,  IG  Sup.  Ct.  488;  lasigi  v.  Koseustein, 
141  N.  Y.  414,  36  N.  E.  509. 

8  4  5  Mees.  &  W.  639. 

85  9  Mees.  &  W.  600. 

86  4  C.  B.  (N.  S.)  85. 


WEST   PL'BLIBBINO  CO.,  PKINTERB  AND  8TEREOTYPER8,  ST.  PAUL,  MI.NN. 


PRINCIPLES 


OK    iMK 


LAW  OF  SURETYSHIP  AND  GUARANTY 


A  MONOGRAPH 


St.  Paul,  Minx. 
WEST  PUBLISHING   CO. 

icSyy 


COPYRIfiUT,  1899, 

1!Y 

WEST  PUBLISHING  COMPANY. 


SURETYSHIP  AND  GUARANTY. 


1.  DEFINITIONS. 


(a)  A  gvaranfy  is  an  imdertakino;  by  one  person  that  in  case  an- 
otlier,  wlio  is  piiin:iril\  liable  to  pay  or  perform  some  debt  or  ob- 
lij^ation,  fails  to  do  so,  he  will  be  answerable  for  the  nonpayment 
(.r  nonpi'i'fnrniance. 

(b)  kSnrctijshIp  is  the  obligation  assumed  by  one  who  binds  him- 
self with  a  i)rinc'ipal,  as  an  orij;inal  promisor,  for  the  payment  or 
performance  of  a  debt  or  obligation  of  the  principal.  McMillan  v. 
)lank,;{2Tnd.  14. 

(c)  A  f/u((mntor  is  one  who  makes  a  guaranty. 

(d)  A  guarantee  is  one  for  whose  benefit  a  guaranty  is  given. 

(e)  A  i^xrcfy  is  one  who  l^inds  himself  with  a  principal  as  an  origi- 
nal promisiir  for  the  payment  or  performance  of  some  debt  or  ob- 
lifjcation  of  the  principal. 

(f)  A  principal,,  or  principal  debtor,  is  one  who  is  ultimately  liable 
for  the  payment  or  performance  of  some  debt  or  obligation  in  re- 
sjK'Ct  of  which  another  acts  as  guarantor  or  surety.  ' 

(g)  A  creditor  is  one  who  is  entitled  to  enforce  a  de])tor  obliga- 
tion against  a  principal  debtor  or  surety,  or  to  hold  a  guarantor  an- 
sw(  inblc  in  case  of  nonpayment  or  nonperformance.  In  the  latter 
case  he  is  also  termed  a  "guarantee." 

(h)  Suretyship  and,  guaranty  compared.  The  terms  "siu-etyship'' 
and  "guaranty"  are  often  used  inaccurately,  as  if  having  the  same 
meaning.  But,  while  they  have  certain  points  of  resemblance,  there 
are  important  differences  between  them.  Thus,  both  involve  the 
liability  of  one  person  for  a  debt  or  obligation  for  which  another  is, 
as  between  themselves,  ultimately  liable.  But,  the  surety  being 
bound  with  his  i)riucipal  as  an  original  promisor,  he  is  himself  a 
srK.&  G.— 1 


2  SURETYSHIP    AND   GUARANTY. 

debtor  from  the  beginning,  and  must  see  tluit  the  debt  is  paid,  and 
is  held,  ordinarily,  to  know  every  default  of  his  principal,  and  can- 
not protect  himself  by  the  mere  indulgence  of  the  creditor,  nor  by 
want  of  notice  of  the  default  of  the  principal,  however  such  indul- 
gence or  want  of  notice  may,  in  fact,  injure  him.  On  the  other 
hand,  the  contract  of  a  guarantor  is  his  own  separate  contract  that 
the  thing  guarantied  to  be  done  by  the  principal  shall  be  done, — 
not  a  mere  joint  agreement  to  do  it.  A  guarantor,  therefore,  is  not 
bound  to  do  what  the  principal  has  contracted  to  do,  but  only  to 
answer  for  the  consequences  of  the  default  of  the  principal.  He 
is  not  invariably  bound  to  take  notice  of  nonperformance  by  the 
principal;  and  if,  when  entitled  to  notice,  he  suffers  damage 
through  the  creditor's  failure  to  notify  him,  he  is  pro  tanto  dis- 
charged. It  is  not  so  with  a  surety.  McMillan  v.  Bank.  32  Ind.  13; 
Wright  V.  Simpson,  G  Yes.  714;  Saint  v.  Manufacturing  Co.,  05 
Ala.  371,  10  South.  530;  Campbell  v.  Sherman,  151  Pa.  St.  70,  25 
Atl.  35;  Deobold  v.  Oppermann,  111  N.  Y.  531,  10  N.  E.  04. 

Usually,  a  surety  is  bound  by  the  same  terms  of  the  same  con- 
tract as  his  principal.     Powell  v.  Allen,  11  111.  App.  134. 

(i)  Suretyship^  guaranty^  and  indorsement  compared.  An  in- 
dorsement is  the  writing  of  the  name  of  a  holder  upon  an  instru- 
ment with  the  intent  either  to  transfer  the  title  to  the  same,  or  to 
strengthen  the  security  of  the  holder  by  assuming  a  contingent 
liability  for  its  future  payment,  or  both.  It  strictly  applies  only  to 
negotiable  instruments. 

An  indorsement  is  classed  by  itself  as  a  distinct  body  of  contract 
rights  and  liabilities.  It  has  its  origin  in,  and  is  contined  to,  ne- 
gotiability. Orrick  v.  Colston,  7  Grat.  (Va.)  105.  It  is  a  contract, 
and  one  to  which  the  law  merchant  and  the  common  law  have  ap- 
])ended  very  peculiar  conditions.  It  is  a  contract  something  in  the 
nature  of  a  guaranty  (Oakley  v.  Boonnan,  21  Wend.  [N.  Y.]  588; 
Kingsland  v.  Koeppe,  137  111.  344,  28  N.  E.  48);  something  in  the 
nature  of  a  warranty,  and  to  the  liability  under  which  the  laws 
have  attached  the  very  unusual  conditions  of  presentment,  demand, 
and  notice  of  dishonor  (Osgood's  Adm'rs  v.  Artt,  17  Fed.  575;  Johns. 
Cas.  Bills  &  N.  107). 

An  indorser  is  liable  only  when  the  note  has  been  duly  presented 
for  payment  on  the  exact  date,  and  when  due  notice  has  been  given 


DEFINITIONS.  3 

to  him  of  its  nonpayment,  in  exact  compliance  with  the  law  as  to 
time  and  method  of  service  of  notice.  If  these  conditions  are  ful- 
filled, he  is  liable;  if  not,  he  is  absolutely  discharged.  A  guarantor 
is  liable  upon  receiving  notice  of  nonpayment  within  a  reasonable 
time;  and,  even  though  the  notice  is  unreasonably  delayed,  this 
only  discharges  him  to  the  extent  of  damage  to  him  thereby  occa- 
sioned.^ Story,  Prom.  Notes,  §  400;  Hunter  v.  Moul,  98  Pa.  St.  16, 
17;  Gibbs  v.  Cannon,  9  Serg.  &  R.  (Pa.)  198;  Overton  v.  Tracey,  14 
Serg.  &  R  (Pa.)  311. 

(j)  Chuaranty  and  warranty  distinguished.  Warranty  differs  from 
a  guaranty  in  that  it  relates,  not  to  some  debt  or  obligation  of  any 
third  party,  but  to  some  feature  of  an  agreement  made  by  the  very 
person  who  also  makes  the  warranty  as  a  part  thereof.  Wiley  v. 
Inhabitants  of  Athol  150  ]\rass.  4.34,  23  N.  E.  311;  De  Col.  Guar. 
&  Sur.  1,  2. 

(k)  Guaranties  of  payment  and  of  collection.  The  fundamental 
distinction  between  a  guaranty  of  payment  and  one  of  collection  is 
that  in  the  first  case  the  guarantor  undertakes  unconditionally  that 
the  debtor  will  pay,  and  the  creditor  may,  upon  default,  proceed 
directly  against  the  guarantor,  without  taking  any  steps  to  collect 
of  the  principal  debtor,  and  the  omission  or  neglect  to  proceed 
against  him  is  not  (except  under  special  circumstances)  any  defense 
to  the  guarantor;  while  in  the  second  case  the  undertaking  is  that, 
if  the  demand  cannot  be  collected  by  legal  proceedings,  the  guar- 
antor will  pay,  and  consequently  legal  proceedings  against  the  prin- 
cipal debtor,  and  a  failure  to  collect  of  him  by  those  means,  are 
conditions  precedent  to  the  liability  of  the  guarantor;  and  to  these 
the  law,  as  established  by  numerous  decisions,  attaches  the  further 
condition  that  due  diligence  be  exercised  by  the  creditor  in  enfor- 
cing his  legal  remedies  against  the  debtor.  McMurray  v.  Noyes.  72 
N.  Y.  525;  Cass  v.  Shewman,  61  Hun,  472,  16  N.  Y.  Supp.  236.  Com- 
pare Campbell  v.  Sherman,  151  Pa.  St.  70,  25  Atl.  35. 

The  general  rule  in  regard  to  one  who  becomes  the  guarantor  of 
the  collection  of  a  demand  is  that,  in  so  doing,  he  undertakes  that 
the  claim  is  collectible  by  due  course  of  law,  and  the  guarantor  only 
promises  to  pay  when  it  is  ascertained  that  it  cannot  be  collected 
by  suit  prosecuted  to  judgment  and  execution  against  the  prin- 
cipal;   and  the  endeavor  to  so  collect  is  a  condition  precedent  to 


-1  SlinCTVSIII!'    AM)    (ir.MtANTY. 

n  rijilit  of  Mclioii  n.^aiiist  tlic  uiKiraiilnr.  Aiul  llir  fad  <if  insolvency 
is  no  cxmsc  for  {\\v  failure  to  iMoscrulc.  'i'lic  jndiinnnl  must  have 
Ift'on  rt'covert'd,  and  tlic  execution  issued  tliereiui  must  have  been 
ictucned  unsatisfied  in  whole  or  in  part.  l»efoi-e  any  liability  is  fas- 
tened u|Kin  the  guarantor.  And  the  judgment  must  have  bcon  re- 
covered without  unreasonable  delay,  r.etween  llie  two  exti-eines 
rejiresenti'd  by  a  "iuaranty  of  collection  and  one  (d'  payment,  how- 
ever, the  parties  may.  by  the  terms  of  the  contract  of  f^uaranty, 
create  variati(»ns  upon  those  general  juincipies.  Salt  Springs  Nat. 
i:ank  v.  Sloan,  135  N.  Y.  371,  32  N.  E.  231:  l)utch<'r  v.  Ibnk.  \)i\ 
Mich.  ITi;  55  N.  W.  67G;  Chatham  Nat.  I'.aidv  v.  Pratt,  135  N.  Y. 
123.  3.2  N.  E.  23(1;  Mead  v.  Parker,  111  N.  Y.  25'J,  18  N.  E.  727; 
•  'umminiis  v.  Arnohl.  :'  .Mete.  (Mass.)  48G;  McCown  v.  Muldoon,  147 
Pa.  St.  311,  23  Atl.  300. 

And  in  (lillespie  v.  Wheeler,  4G  Conn.  410,  it  is  held  that  as 
against  a  third  party  who  indorses  a  note  before  delivery,  and  so  is 
a  guarantor,  no  suit  against  the  ])rincii»al  need  be  brought  if  he 
has  not  enough  property  to  satisfy  the  demand  in  full. 

A  guaranty  of  payment  is  a  special  form  of  contract,  by  Nvhich 
the  guarantor  renders  himself  liable  under  conditions  other  than 
those  which,  according  to  general  principles,  would  be  essential  to 
establish  his  liability.     Arents  v.  Com.,  18  Grat.  (Va.l  770. 

(1)  Suiitiiiarij.  The  true  distinction  between  a  surety  and  a  guar- 
antor is  obscured  by  the  fact  that  the  term  "surety"  is  frequently 
us(m1  in  ditferent  senses.     Thus: 

111  It  is  sometimes  emi)loyed  in  a  general  sense,  to  designate  any 
one  who  is  liable  to  a  third  party  for  a  debt  or  obligation  for  which 
another  jjcrson  is  ultimately  liable  as  the  real  principal;  thus  in- 
cluding both  sureties  and  guarantors,  and  sometimes  even  indorsers, 
of  commercial  i)ai)er.  An  illustration  of  this  use  is  found  in  the 
familiar  propositions  that  a  suicty  who  is  obliged  to  pay  tlu'  debt 
secured  is  entitled  to  contribution  from  his  co-sureties,  and  to  reim- 
l.iirseiiient  from  the  princi]ial  (l)e  Col.  Guar.  &  Sui-.  ;!(>7,  33G), — prop- 
ositions which  ajtply  with  e(|iial  force  to  both  suieties  and  guar- 
antors. "A  guarantor  has  all  the  rights  of  a  surety  in  equity."  De 
("ol.  ( luai'.  «.V:  Sui'.  1 .  note. 

So  the  terms  "guaranty"  and  "guarantor"  are  often  used  in  a  ge- 
neric sense,  so  as  to  include  both  guaianty  and  suretyship,  as  where 


DKFIMTIONS,  O 

De  Colyar  bojjins  the  sixlh  clinptci-  of  his  work  (page  211)  by  say- 
ing that,  in  proceeding  to  ascertain  tlio  extent  and  nature  of  a 
tsu rt't ;/" s  lial)ility,  lie  ])roposes  to  call  attention  to  the  rules  lor  the 
construction  oi  guaranties'  an<l,  in  the  notes  on  the  same  page,  it  is 
said  that  doubtful  language  in  a  contraet  of  guarajity  may  be  con- 
strued most  strongly  against  the  guarantor^  but  that  the  meaning  of 
the  contract  cannot  be  extended,  to  the  prejudice  of  the  xurety^ — all 
the  foregoing  statements  being  intended,  in  fact,  to  apply  both  to 
sureties  and  guarantors. 

(2)  Sometimes  the  term  ''surety"  is  employed  to  distinguish  the 
party  thus  designated  from  a  guarantor,  as  where  it  is  said  that  a 
surety,  jointly  bound  with  his  principal  as  an  original  promisor, 
may  be  joined  with  the  principal  as  a  defendant  in  an  action 
brought  by  the  creditor  upon  their  common  contract  (Dart  v.  Sher- 
wood, 7  Wis.  52.3);  while  a  guarantor,  being  bound  by  a  distinct  and 
separate  contract  from  that  of  the  principal,  cannot  thus  be  joined 
as  a  defendant  in  an  action  based  on  the  principal  contract,  but 
must  generally  be  sued  separately  (Read  v.  Gutts,  7  Greenl.  pie.] 
186). 

(3)  Still,  again,  it  frequently  happens  that  the  term  "surety"  is 
loosely  employed  in  referring  to  one  who  is  a  guarantor  as  dis- 
tinguished from  a  surety;  as,  for  example,  in  Cass  v,  Shewman,  61 
Hun,  472,  16  N.  Y.  Supp.  236,  where  the  defendant  had  signed  an 
agreement,  upon  a  lease  given  by  plaintiff  to  a  third  party,  which 
the  court  say  was  in  substance  a  guaranty,  and  yet  they  elsewhere 
speak  of  the  defendant  as  the  surety. 

(4i  It  must  also  be  noticed  that  the  term  "guarantor,"  even  when 
correctly  employed  in  its  strict  sense,  may  vary  somewhat  in  mean- 
ing, and  that  the  rights  and  liabilities  of  a  guarantor  may  vary  ac- 
cording to  the  nature  of  the  given  guaranty.  Thus,  a  guarantor  of 
collection  is  not  liable,  as  already  stated,  until  the  creditor,  after 
default,  has  exhausted  the  appropriate  legal  means  (to  an  extent 
which  varies  somewhat  in  different  jurisdictions)  of  enforcing  pay- 
ment by  the  principal;  while  a  guarantor  of  payment  usually  is  held 
liable  at  once  upon  default,  even  before  any  demand  has  been  made 
upon  the  principal.  This  latter  form  of  guaranty,  which  in  fact 
approaches  very  closely  to  a  contract  of  suretyship,  is  nevertheless 
distinguishable  therefrom  in  this:  that  the  surety  undertakes,  jointly 


6  SURKTYSHIP    AND    GUARANTY. 

with  the  principal,  to  see  that  the  debt  is  paid,  and  to  pay  it  if  the 
principal  does  not,  while  the  guarantor  of  payment  agrees,  not  to 
pay  tlu'  debt,  but,  in  case  of  the  i)rincipars  default,  to  answer  to 
the  creditor  for  the  consequences  of  such  default. 

In  distinguishing  between  a  surety  and  a  guarantor,  on  the  one 
liand,  and  an  indorser  of  commercial  paper,  on  the  other,  it  is  to 
be  noticed,  in  addition  to  the  distinction  arising  out  of  the  pecul- 
iar rules  as  to  presentment  and  notice  of  dishonor,  which  exist  in 
favor  of  the  latter,  that  the  indorser  merely  signs  his  name,  his 
agreement  being  implied  by  the  law,  and  not  express,  while  the  con- 
tract of  a  guarantor  or  surety  is  almost  invariably  expressed  in 
terms, 

(m)  A  letter  of  credit  is  a  writing  addressed  to  one  or  more  in- 
dividuals or  classes  of  persons,  or,  generally,  to  any  person,  by 
which  the  signer  undertakes  to  become  responsible,  either  directly 
as  a  surety  or  collaterally  as  a  guarantor,  and  either  generally  or 
specially,  for  payments  to  be  made,  or  credits  to  be  extended,  to  a 
third  party  named  in  the  letter. 

Letters  of  credit  are  governed  by  the  same  general  legal  princi- 
ples as  other  guaranties.  Bank  of  Montreal  v.  Kecknagel,  109  N. 
Y.  482,  17  N.  E.  217. 

(n)  A  continuing  gimranty  is  one  which  is  not  confined  to  a  par- 
ticular transaction,  but  which  covers  successive  future  credits,  ad- 
vances, or  obligations,  existing  at  any  given  time,  either  generally 
or  to  a  specified  standing  amount.  Beakes  v.  Da  Cunha,  120  N. 
Y.  298,  27  N.  E.  251;  Sherburne  v.  Paper  Co.,  40  111.  App.  383;  Smith 
V.  Xslw  Wyck,  40  Mo.  App.  522;  Dover  Stamping  Co.  v.  Noyes,  151 
Mass.  342,  24  N.  E.  53. 

In  construing  a  given  guaranty,  it  is  frequently  difficult  to  deter- 
mine on  which  side  of  the  line  separating  limited  from  continuous 
guaranty  it  belongs.  The  intent  of  the  party  to  be  derived  from  the 
words  is  the  only  sure  guide,  and  therefore  very  little  aid  is  to  be 
derived  from  the  adjudged  cases,  which  necessarily  turn  upon  the 
peculiar  phraseology  of  particular  guaranties.  McShane  Co.  v. 
Padian,  142  N.  Y.  207,  36  N.  E.  880. 

But  the  mere  fact  that  a  guaranty  is  for  an  unlimited  amount  of 
goods  does  not  render  it  continuing  in  respect  to  time,  for  it  may 


DEFINITIONS. 


merely  guaranty  any  amount  of  purchases  to  be  made  at  a  given 
time.     Rogers  v.  Warren,  8  Jolms.  (X.  Y.)  119. 

(o)  General  and  special  guaranties.  Guaranties  are  of  two  kinds, 
general  or  special.  They  are  general  when  they  guaranty  any  per- 
son who  may  act  upon  them,  and  special  when  the  particular  per- 
son or  class  of  persons  guarantied  is  specified.  Evansville  Nat. 
Bank  v.  Kaufmann,  93  N.  Y.  277;  Lowry  v.  Adams,  22  Vt.  IGO. 

This  is  the  usual  meaning  of  the  terms  defined.  But  the  terms 
are  also  sometimes  used  in  other  senses.  For  a  given  guaranty  may 
be  general  in  certain  aspects  and  special  in  others.  Thus,  it  may  be 
general  as  to  the  whole  world,  to  whom  the  principal  may  be  ac- 
credited, and  to  any  portion  of  whom,  at  his  own  option,  he  may 
make  the  guarantor  a  debtor,  and  at  the  same  time  it  may  be  special 
as  to  the  amount  of  the  credit;  or  it  may  be  unlimited  or  general 
as  to  amount,  and  special  as  to  the  parties  who  may  act  upon  it. 
Taylor  v.  Wetmore,  10  Ohio,  491.  And  even  when  general,  both  as  to 
amount  and  persons,  it  may  contemplate  only  a  single  transaction,  or 
an  open  and  continued  credit  embracing  several  transactions.  Union 
Bank  v.  Coster's  Ex'rs,  3  N.  Y.  214. 

It  is  always  competent  for  a  guarantor  to  limit  his  liability,  either 
as  to  time,  amount,  or  parties,  by  the  terms  of  his  contract;  and, 
if  any  such  limitation  be  disregarded  by  the  party  who  claims  un- 
der it,  the  guarantor  is  not  bound.  It  follows  that  no  one  can  ac- 
cept its  propositions,  or  acquire  any  advantage  therefrom,  unless  he 
is  expressly  referred  to  or  necessarily  embraced  in  the  description 
of  the  persons  to  whom  the  offer  of  guaranty  is  addressed.  Rob- 
bins  V.  Bingham,  4  Johns.  (N.  Y.)  476;  Evansville  Nat.  Bank  v. 
Kaufmann,  93  N.  Y.  279. 

It  has  been  suggested  in  some  cases  that  the  right  of  a  party  ad- 
vancing money  upon  a  general  letter  of  credit  to  maintain  an  action 
on  it  might  be  questionable,  on  the  ground  that  there  is  no  privity 
of  contract.  Bank  of  Ireland  v.  Archer,  11  Mees.  &  W.  383;  Rus- 
sell V.  Wiggin,  2  Story,  214,  Fed.  Cas.  No.  12,165;  Torrance  v.  Bank,. 
L.  R.  5  C.  P.  252. 

But  in  this  country  the  contrary  doctrine  is  well  settled,  on  the 
theory  that  the  general  letter  is  addressed  to  any  and  every  person, 
and  therefore  gives  to  any  person  to  whom  it  may  be  shown  au- 
thority to  advance  upon  its  credit,  so  that  it  becomes,  in  legal  effect. 


8  SUKETVSHIP    AND    GUARANTY. 

the  same  as  if  addressed  to  him  by  nainc.  Union  Bank  v.  Coster's 
Ex'rs,  3  N.  Y.  214;  Duval  v.  Trask,  12  Mass.  154;  Adams  v.  Joues, 
12  rot.  207. 


FORMATION   OF   THE   CONTRACT. 

2.   FORM  OF  THE  CONTRACT. 

Besides  a  consideration,  it  is  essential  that  a  contract  of  surety- 
ship or  guaranty  sliould  be  between  proper  parties,  viz.  a  promisor, 
a  principal,  and  a  promisee;  and  it  is  also  essential  that  such  con- 
tracts should  describe  or  refer  to  these  parties  so  as  to  identify 
them,  either  individually  or  as  a  class.  Evansville  Nat.  Bank  v. 
Kaufmann,  93  N.  Y.  270. 

Except  as  otherwise  required  by  its  nature  in  a  given  case  or  by 
statute,  the  contract  may  be  oral,  but  in  practice  is  almost  always 
in  writing. 

3.  ASSENT  or  THE  PARTIES— ACCEPTANCE. 

A  contract  of  guaranty,  like  every  other  contract,  can  only  be 
made  by  the  mutual  assent  of  the  parties.  Davis  Sewing-Mach. 
Co.  v.  Richards,  115  U.  S.  527,  6  Sup.  Ct.  173. 

Upon  the  question  whether,  or  in  what  cases,  the  guarantee,  in 
addition  to  accepting  in  fact,  and  acting  upon,  a  guaranty,  must 
notify  the  guarantor  thereof,  a  difference  of  opinion  exists.  In  the 
federal  courts,  it  is  established,  the  guaranty  is  signed  by  the  guar- 
antor at  the  request  of  the  guarantee,  or  if  the  latter's  agreement 
to  accept  is  contemporaneous  with  the  guaranty,  and  (constitutes 
its  consideration  and  basis,  or  if  the  receipt  from  him  of  a  valuable 
consideration,  however  small,  is  acknowledged  in  the  guaranty,  or 
if  the  instrument  is  in  the  form  of  a  bilateral  contract  in  which  the 
guarantee  binds  himself  to  make  the  contemplated  advances,  or 
which  otherwise  creates  by  its  recitals  a  privity  of  contract  be- 
tween the  guarantor  and  giiai-antee,  in  all  these  cases  the  mutual 
assent  is  pr(ned,  and  the  <l(Miv<'ry  of  the  guaranty  to  him  or  for  his 
use  completes  the  contract.  But  if  the  guaranty  is  signed  by  the 
guaiantor  without  any  previous  request  of  the  guarantee,  and  in 
his  absence,  fur  no  consideration  moving  between  them  except  fu- 


FORMATION   OF    THK    CONTRACT.  9 

ture  advances  to  be  made  to  the  principal  debtor,  the  guaranty  is 
in  legal  effect  an  offer  or  proposal  on  the  part  of  the  guarantor, 
needing  an  acceptance  and  notice  thereof  by  the  other  party  to 
<;omplete  the  contract.  Davis  Sewing-Mach.  Co.  v.  Richards,  115 
U.  S.  527,  G  Sup.  Ct.  173;  Davis  v.  Wells,  104  U.  S.  164;  City  Coun- 
<-il  of  Greenville  v.  Ormand,  51  S.  C.  58,  28  S.  E.  50;  Gano  v.  Bank 
(Ky.  App.)  45  S.  W.  511). 

In  other  jurisdictions,  it  is  the  fact  of  compliance  with  the  out- 
standing offer,  represented  by  a  guaranty  of  a  future  obligation, 
which  constitutes  the  consideration,  and  raises  a  privity  of  con- 
tract between  the  guarantor  and  the  guarantee,  and  accordingly 
there  is  no  general  requirement  of  a  notice  of  acceptance,  such 
notice  being  unnecessary  where  the  guaranty  is  absolute  in  form 
and  only  required  where  it  is  conditional  upon  such  notice.  Union 
Bank  of  Louisiana  v.  Coster's  Ex'rs,  3  N.  Y.  212;  City  Nat.  Bank  of 
Poughkeepsie  v.  Phelps,  86  N.  Y.  493;  Village  of  Chester  v.  Leon- 
ard, 68  Conn.  506,  37  Atl.  397;  Taussig  v.  Reid,  145  111.  494,  32  N. 
E.  918;  Mussey  v.  Rayner,  22  Pick.  (Mass.)  223;  Howe  v.  Nickels, 
22  Me.  175;  Norton  v.  Eastman,  4  Greenl.  (Me.)  521. 

An  offer  to  guaranty  may  be  a  proposition  which  is  to  become  a 
contract  upon  the  giving  of  a  promise  for  a  promise,  in  which  case 
^  notice  of  acceptance  is  necessary;  or  it  may  be  an  offer  intended 
to  become  a  contract  upon  the  doing  of  the  act  referred  to,  in  which 
case  the  doing  of  the  act  constitutes  the  acceptance  of  the  offer  and 
furnishes  the  consideration.  But,  even  in  such  a  case,  if  the  act  is 
of  such  a  kind  that  knowledge  of  it  will  not  quickly  come  to  the 
guarantor,  the  promisee  is  bound  to  give  him  notice  of  his  accept- 
ance within  a  reasonable  time  after  doing  that  which  constitutes 
the  acceptance.  Bishop  v.  Eaton,  161  Mass.  499,  500,  37  N.  E.  665 ; 
Babcock  v.  Bryant,  12  Pick.  (Mass.)  133;  Whiting  v.  Stacy,  15  Gray 
{Mass.)  270. 

When  notice  of  acceptance  is  required,  the  implication  is  that 
notice  shall  be  given  in  a  reasonable  manner,  which  may  be  by  mail 
or  otherwise,  according  to  circumstances.  If  notice  by  letter  is 
enough,  a  due  mailing  sufiices,  although  the  notice  is  not  in  fact  re- 
ceived (Bishop  V.  Eaton,  161  Mass.  500,  501,  37  N.  E.  665;  Reynolds 
V.  Douglass,  12  Pet.  504);  and  a  due  acceptance  may  arise  by  im- 
plication (Johnson  v.  Gerald,  169  Mass.  500,  48  N.  E.  764). 


10  8URETYSII11'    A  NO    (UAHAMY. 

Delivery.  Althoufjli  iU-liviiv  of  an  iii-tiuim-iit,  as  distiiii^uished 
fioiM  ;i  iiifcl  iii},^  (»f  llif  iniiitis  of  the  i>;iriirs,  is  luit  rssciil  i;il  to  llu' 
foiiiiMiioii  of  a  foiiliart.  as  a  ;,^iMi(Mal  iito|i<isii  ioii.  llitiv  aw  ciiscs 
ill  wliitli  such  (l('livci\v  is  essential  to  the  i  reatioii  of  I  lie  ohlij^Mtion 
of  a  surety  or  ^Miarani or.  Thus,  where  one  eiiteis  int(»  an  afjree- 
luent  with  a  huihlin^^  ((Uitraetor,  ujion  the  faith  of  the  hillef's 
pKuiiise  to  ;,M\e  ;i  hoiid  as  security,  the  otlier  paily  is  not  bound 
until  such  bend  is  delivered,  und  ilie  obliuaiiou  of  the  sundies 
arises  at  the  same  lime.  Smith  v.  MoUesoii.  1  IS  X.  ^^  I'll.  IL'  N.  K. 
(It;!). 

So  the  circuuistam-es  in  connection  with  the  execution  of  any  con- 
ti-act,  though  signed  and  witnessed,  may  be  such  as  to  establish  the 
understanding  that  it  was  not  to  become  operative  until  delivei-y. 
hietz  V.  Farish.  7J)  N.  Y.  520. 

Thus,  if  one  surety  signs  and  places  a  bond  in  the  hands  of  his 
co-obligor  with  the  stijuilation  that  it  is  not  to  take  effect  unless 
another  surety  signs,  and  the  obligee  has  notice  of  this,  the  first 
surety  is  not  liable  if  the  other  did  not  sign.  McFarlane  v.  ITowell 
.Tex.  Civ.  App.)  43  S.  W.  315;  Quimby  v.  Wood,  1!)  K.  I.  571,  .'.5 
Atl.  149;  City  of  Hallettsville  v.  Long,  11  Tex.  Civ.  xVpp.  ISO.  '.V2 
S.  ^Y.  507;  Schuff  v.  Pflanz,  90  Ky.  97,  35  S.  W.  132.  But  other- 
wise if  the  creditor  has  no  notice  of  the  fact.  Etz  v.  Place,  81  Hnn. 
203.  30  N.  Y.  Supp.  705. 

And  an  offer  to  guaranty,  though  reciting  a  consideration,  must 
be  delivered  to  the  person  guarantied,  befiue  it  can  take  elTe<t. 
Davis  V.  Wells,  104  U.  S.  168. 

And,  in  the  case  of  a  contract  of  guaranty  or  suretyship  indorsed 
upon  an  instrument  transferring  an  estate  in  land,  a  d(divery  of  the 
principal  instrument  is  reciuisite.  delivery  being  an  element  of  the 
execution  of  a  deed.  Kahn  v.  Itrewing  Co.,  17  Misc.  Kep.  394.  3!> 
N.  Y.  Suiip.  1093. 


KOKMATION    OK    THK    CONTItACT.  1  1 


4.  CONSIDERATION. 

Like  oilici-  conli'iU'ls,  (hut  of  a  siirct.v  or  f^iiaraiilor  rcqtiiros  a 
consideration. 

(a)  If  llic  principal  contract  has  already  been  execntcd,  and  the 
<,niaranl  V  is  ^iven  siil)sc(piriit  l_v,  tlu*re  must  be  a  new  consideration, 
(lislinct  from  that  supporting  the  principal  contract.  If,  in  sucli  a 
case,  the  contract  of  guaranty  is  for  the  benefit  of  the  guarantor, 
that  fact  constitutes  a  sullicient  consideration.  Davis  v.  Wells, 
104  I'.  S.  1G5,  1G6;   Overton  v.  Trucey,  14  Serg.  &  K.  (I'a.)  ?>U. 

And  the  obligation  of  a  surety  to  pay  a  note,  though  barred  by 
the  statute  of  limitations,  is  suflicient  consideration  for  his  subse- 
(pient  guaranty  thereof.     Miles  v.  Linnell,  1)7  Mass.  298. 

And  if  the  owner  of  a  note  indorses  and  transfers  it  for  a  con- 
sideration, and  guaranties  collection,  no  further  consideration  to 
hira  is  requisite.  Gillighan  v.  Boardman,  29  Me.  79;  Osborne  v. 
Lawson,  2(J  Mo.  App.  554. 

(b)  If  a  subseipient  guaranty  of  an  existing  obligation  is  not  given 
for  the  benefit  of  the  guarantor,  then  an  advantage  accorded  by  the 
guarantee  to  the  principal,  involving  forbearance,  detriment,  loss, 
or  responsibility  on  the  part  of  the  guarantee,  upon  the  faith  of  the 
guaranty,  is  a  suflicient  consideration.  Traders'  Nat.  Bank  v.  Par- 
ker, 130  N.  Y.  420,  29  N.  E.  1094;  Strong  v.  Shellield,  144  N.  Y.  392, 
39  N.  E.  330;  Ware  v.  Adams,  24  Me.  177. 

And  if  a  debtor  transfers  property  to  a  third  person  in  consider- 
ation of  the  latters  promise  to  the  debtor  to  pay  the  debt  to  the 
creditor,  the  latter  may  accept  and  adopt  the  promise  when  it 
becomes  known  to  him,  and  may  maintain  an  action  upon  it.  When 
the  promise  in  such  cases  is  the  consideration  or  condition  upon 
which  the  third  party  has  received  the  debtor's  property,  he  thei-e 
by  makes  the  debt  his  own,  and  assumes  an  independent  duty  of 
payment,  irrespective  of  the  liability  of  the  princijxil  or  original 
debtor.     Clark  v.  Howard,  150  X.  Y.  238,  44  N.  E.  095. 

Even  where  the  obligation  has  been  created,  but  is  not  yet  du<- 
and  payable,  a  new  consideration  must  appear,  in  order  to  bind  one 
who  then  guaranties  it.     Tenney  v.  Prince,  4  Pick.  I'^Iass.)  385. 

An  agreement  by  a  creditor  to  forbear  the  collection  of  a  debt 
presently  due  is  a  good  consideration  for  an  absolute  or  conditional 


12  grKKrYSIllP     \M»    t.lAKAMV. 

|tioiiiisr  iif  a  third  [n  rsoii  («i  |ia\  ilif  tlilii.  or  for  any  oltli^at  ion  ho 
iiiav  assiniir  in  rcs|M(|  (In-ri-lti.  Noi'  is  il  cssriilial  ihat  tin-  ci'cdilor 
.vhnnhl  liiiitl  liiinsclf  at  tin-  liiiif  In  fnilicai-  (»r  In  ;:ivr  linn-.  If  hf 
is  roiursh'd  l»v  Ills  tlflMnr  to  cxlrnd  llir  linn-,  and  a  ihird  pci'son 
nndcrtakt'S.  in  considt'iat  inn  <d'  fmlMarancf  luin;^'  I^mmmi.  In  hccnnic 
lialdc  as  snrdv  m-  nih<  rwisc.  and  ihc  cicdiinr  d(ns  in  fart  fmlicar 
ill  i'rlianr(>  u|)<in  lh<-  nnd*-i'iai<iii;4.  alllinn;:h  hi-  i  nifis  intn  nn  *-n 
fniccaldc  a^rrninriil  to  (h)  so.  Iiis  at'«|Mirs(»'nif  in  Mu-  rri|nisi.  ami 
an  aiiiial  fnilicaiancr  in  cnnsrinicnrr  ihi  icnf  for  a  i<asnnalih'  limn, 
fnrnishcs  a  j^nod  consichTatinii  for  Mm  ((lUatcral  nndnriakiii':.  In 
nthcr  wnfds.  a  rcciimsl.  fnlhiwnd  l»v  inifminanrf.  is  siilVnit-nt.  and 
iniilnal  prninisns  at  the  time  am  not  tssmitial.  nidnss  il  was  Ihn 
iiiKh'islandini:  ihal  thn  juninisnr  was  iml  In  Im  Itnund  cxcriil  nn  mii 
♦  liiinii  llial  llm  nilmr  parly  I'litticd  iiiln  an  ininindiaic  and  re 
<i|ii(Hal  nhli;^alinn  to  do  Ihc  lliin^^  prt'sniitcd.  Tlir  j)ro|»ositl()n  of 
ihn  i,Mia!'aninr  is  an  miistaiidin;;  niVnr.  which  ihr  cicdiinr  may  iians 
fnnii  into  a  contract  by  an  acccptainc  <nnsisiin^f  in  ailin}f  upon  the 
faith  tlicrcof.  Stniiiff  v.  Shcflicld.  Ill  N.  Y.  ::!»4,  :'.!•  X.  K.  '-VM):  Mnr 
Inn  V.  15nin,  7  Adnl.  &  K.  11>;  Wilhy  v.  K!«;cc,  L.  K.  Id  ('.  W  VM : 
Kin;:  v.  I'ptnn.  I  ('ircnnl.  i.Mc.i  :{ST;  l.cakf.  ('niit.  p.  .">  I ;  I-'mlh  v. 
Stanton.  1   Saund.  L'lO,   note  (b).     Cnmiiaiv  Caiy   v.  While.  ."'J   \.   V. 

i;:s. 

In  the  absence  of  a  spccilicd  lime,  a  leasnnable  time  is  in-ld  tn  be 
iniendi-d.  Siim.ii;:  v.  ShelVKld.  Ill  N.  ^■.  ::!•."..  :::►  X.  !•:.  ••{•■:<>:  Older 
shaw  V.  Kin;;.  L'  llml.  vV:  N.  517;  ('alkins  v.  Chandlci',  .'.li  .Mich.  .•'/JO. 

In  soi.ie  jnrisdictinns.  liowever,  the  rule  is  that  ineie  fni-beai-ance 
bv  the  creditnr.  in  tiie  absence  of  any  a;:reement  that  lit  will  for 
bear,  is  no  cmsiderai  inn.  Ibss"  llsiali'.  ir.ii  Pa.  Si.  illC.  L' I  All.  tlTti; 
Mauler  V.  Chnrchill,  IL'7  .Mass.  ;{I. 

And  the  fact  thai  the  cnllaleral  may  iinl  be  enfnrceable  nniil  a 
delinite  time  in  the  fiilnre  dnes  linl  operate  In  e.Mend  the  lime  nf 
jiaynient  of  llm  principal  dibt  nr  snspend  Ihe  ri;;hl  !<►  sue  npnii  the 
oii;,'inal  security,  l'.  S.  v.  ilnd^'e.  C.  Ilnw.  •2~U[  Fallkill  Xat.  Kank 
of  I'nn^'hkeepsie  V.  Sh-i;,dil.   I    Apjr.   hiv.   I'.II.  ::7   X.   ^  .  Snj.p.    I  .■).".. 

(<•>  If  the  cnnirail  nf  ;,'iiaranty  nr  siiielysliip  is  made  al  the  s;inie 
liinewilh  the  principal  conlracl.anil  Ihe  latter  is  based  njinn  the  fnr 
mer.  ilien  no  distinct  cnnsideralion  is  retpiisitc  (Simnns  \.  Steele,  .'Wi 
\.  11.  7;i;  Eric  Co.  Sa\.  ISaidv  v.  Coil,  lUl  X.  Y.  oM,  1  I  X.  i:.  ol);   for 


KOllM  A'l'H'N    UK     IIIK    (()NTHA(T. 


i:i 


tlir  ^Mi;iraiil\  or  Min-I  \  slii|),  on  llit-  oiif  liiiiid,  ;iml  ili'-  o.\<'ciil  ion  of 
the  |irin(i|iiil  conliacl  Itv  the  ^,Miaranlrf,  on  lln-  otliri'.  ar<-  conoid 
eratioiiH  oiio  for  llii-  other  (Davis  v.  Wrlls,  101  C.  S.  Iti.-jj;  or,  from 
anotlicr  point  of  view,  tlic  (;onHi«l('ral  ion  jiassin^'  from  llic  ci-cdilor 
supportH  both  the  princijial  contract  and  Ilial  of  tin-  snrct.v  or  ^nar 
alitor  (Eric  Co.  Sav.  l'»aid<  v.  Coit,  104  N.  V.  'y'M,  II  N.  K.  •"•l;  <hI 
lij^haii  V.  Hoardnian,  !".>  Mc  7!);  Hopkins  v.  Kichardson,  ".)  (Irat.  |\'a.] 
4!»1;  Leonard  v.  \'redenlnirj;li,  8  .Johiiw.  [N.  Y.]  l!0;  Darby  v.  ISanU, 
!I7  Ala.  {\i:>.  1 1  Sonlh.  881). 

In  order  that  I  lie  jdincipal  contract  and  tlie  j^naranty  slionld  be 
conteniporaneons  within  tlie  meaning  of  the  foregoing  proposition, 
it  is  not  necessary  that  they  should  be  strictly  siraultaneons.  'i'lms. 
if  A.  procures  a  credit  from  B.  upon  the  assurance  that  he  will  |»ro 
cure  a  gnaianty  from  C.,  and  within  a  short  time  he  does  so,  the 
transactions  are  regarded  as  simultaneous,  and  no  separate  and  dis- 
tinct consideration  to  (\  is  requisite.  Opiwuheim  v.  Waterbury. 
8fi  Ilun,  122,  :?:{  X.  Y.  Supp.  183;  McXaught  v.  Mcrianghry,  42  X.  Y. 
22;  Moies  v.  r.ird.  11  Mass.  4:}<;;  Leonard  v.  ^Yildes.  :',()  Me.  2<;.~): 
Ilawkes  v.  lMiillii)s,  7  (Jray  (Mass.)  286;  Smitli  v.  Molleson,  148  X. 
Y.  241,  42  N.  E.  OGO. 

(d)  When  the  contract  of  guaranty  or  suretyship  is  tendered  be 
fore  the  i>rin(ipa]  contract  is  made,  as  in  Ihe  case  of  a  letter  of 
credit,  and  thus  const  it  uics  an  outstanding  otfer,  it  becomes  a  bind- 
ing contract,  when  accejjted  and  acted  ui)on,  eithei-  with  or  with- 
out notice,  according  to  the  varying  laws  of  ditTei-ent  jurisdictions. 
Evansville  Xat.  Uank  v.  Kaufmann,  93  N.  Y.  270;  Union  Bank  of 
Louisiana  v.  Coster's  Ex'rs,  3  X.  Y.  211;  Davis  v.  Wells,  104  V.  P. 
16G;   Kennaway  v.  Treleavan,  5  Mees.  &  W.  498. 

(e)  When  the  consideration  relied  on  is  one  passing  directly  from 
the  guarantee  to  the  guarantor,  a  nominal  consideration  of  one  dol- 
lar is  sufficient.     Davis  v.  Wells,  104  U.  S.  107,  108. 

(f)  A  written  guaranty  given  by  a  third  party  to  a  creditor,  that 
his  debtor  will  thereafter  pay  to  him  a  pre-existing  debt,  must,  not- 
withstanding the  amendment  of  the  statute  of  frauds  in  Xew  York, 
by  Laws  1803,  c.  404,  expressly  or  by  fair  ini|»lication  disclose  that 
the  i>romise  rests  on  a  legal  consideration.  Barney  v.  Forbes,  118 
X.  Y.  585,  23  N.  E.  890;  Church  v.  Brown,  21  X.  Y.  331;  Drake  v. 
Seaman,  97  X.  Y'.  230. 


11  SlKKTYMlll'    A.NU    L.LAUAMY. 


fi.   COMPETENCY   TO  CONTRACT. 

Tilt"  usual  iiilfs  a|>|>li<:ilili'  |o  (illur  coiitriKis  iti  I'csiM'ct  t(i  tlu» 
<:ip:i(i(v  of  coiiKiraliiiiis  iKix'hh'r  «&  Co.  v.  KfiiilH'iiiicr.  2<>  Apii.  Div. 
1,  1!»  N.  V.  Supp.  7r»r»;  Louisiana  Siato  Hank  v.  Orlt-ans  Nav.  Co.. 
.■>  La.  Amu.  i'.dli.  infants  (Naplrs  v.  Wi;;iilnian.  \  <  "oini.  'AU'r.  Kline  v. 
Ui'clx'.  C  Conn.  .")(»:{;  Heed  v.  Lane,  f.j  \i.  IM.*,  17  .\ll.  T'.Mi;  Pat.hin 
\.  Ci-oniack.  i;'.  \'\.  :'.;{ n,  inlo.xitatcd  jMisons  (l'a;i;<"  v.  Krckcv.  1:57 
X.  V.  :ni,  :\:\  X.  i:.  311;  Ifarly  V.  Smith,  74  111.  App.  l!»h.  lunali<-s 
\an  I'alion  v.  r.eals.  40  Iowa,  (i2;  Seaver  v.  riH-l|.s.  11  IM<k.  [Mass.] 
'Mi),  and  pereons  under  duicss  (see  post,  p.  15),  to  bind  themselves 
liv  contract.  aj»ply  to  contracts  of  surct.vshiii  and  ;;uai-anty.  «'xcept 
as  sonu'tinics  vai'i('<l  by  statute. 

The  sauK  juinciiile  applies  to  uiaiiied  wiuuen.  except  that  j;en 
eral  statutes  confcnin^^  the  ri^ht  to  contract  liave  s<>nietimes  been 
construed  not  to  eover  the  right  to  make  contracts  of  suretyshij*. 
and  that  in  New  Jersey  and  some  other  states  maiTJed  women  are 
jirohibited  from  bindiu};  themselves  as  sureties.  Todd  v.  Baih'y.  58 
X.  JrTaw.  10,  ^'2  Atl.  COC;  Tha(^er  v.  Thacker,  125  Ind.  4S!).  2") 
X.  K.  51)5 ;  Taylor  v.  Aconi  (fud.  T.)  45  S.  W.  l.M);  Wolf  v.  Zinimer 
man.  lL'7  Ind.  1st;.  l'C,  X\  K.  17.!:  I'^reenian  v.  Coleman,  80  Ga.  5!)0. 
12  S.  i;.  loCrl;  Walker  v.  Crucible  Co..  47  X.  J.  K(|.  ^42.  20  Atl.  SS5: 
At  hoi  Mach.  Co.  v.  Fuller.  107  Mass.  4.^7:  Will  bank  v.  Tobler,  181 
I'a.  Si.  108,  :\7  Atl.  iss;  Willard  v.  Kastliaui.  l.~.  Cray  (Mass.)  328; 
( losnian  v.  Cruder,  01)  X.  V.  S7. 

As  to  the  liability  of  attorneys,  where  a  statute  or  couit  rule  re 
(piii'cs  that  they  shall  not  act  as  sureties  on  bonds  i-e<piii-ed  in  legi^l 
pi'ocM  dinars.  se<'  Mvans  v.  Harris.  15. Tones  &  8.  (X.  V.I  '.UU'r.  Ilolands- 
wiiitli  V.  Com..  11  F.ush    (Ky.)  017. 

<  Mie  who  takes  a  priMuissory  note  bearing  the  indorsement  of  a 
liiiii.  eiilier  as  guarantors  (U-  sureties,  takes  it  bui'd<'ne<l  with  the 
piesuin|ition  that  the  liini  name  was  not  signed  in  the  usual  cours<» 
of  pailneiship  business.  .\n(l.  in  oi-der  to  recover,  the  holder  is  i-e 
•  juired  to  show  special  authority  to  make  tlie  indorsement  on  the 
jiail  of  the  jtai'tner  who  signed  the  lirni  name,  or  an  auilioi-ity  to 
lie  implied  from  the  c(»mmon  course  of  business  of  the  Hrm,  or  pre- 
\  iouM  course  of  dealing  between  the  parties,  or  thai  tlie  indoi-seinent 
was  KiibHequently  ad(»pled  and  acted  upon  bj.    the  linn.     Clarke  v. 


KOKM.MIM.N    (»K     IHK    CONTHACT.  15 

Wallace,  1  N.  D.  101.  is  \.  \v.  ;;;!:i;  Sw<ctH<'i-  v.  l-'rnicli,  '2  <'uh\\. 
(Mass.)  30J);  .\a(i(»ii;il  S.-c  r.;iiik  v.  McDoriiild.  lliT  MaBH.  Ml*;  ScIh.t- 
incrlioni  v.  SrIirniMiliniii.  1  Wend.  (N.  V.)  HI*;  Movnnlmn  v.  liana- 
f(»nl,  11'  .Mich.  :\'2'.K  .'5  X.  ^^■.  'til;  .Moor.'  v.  StcvciiH,  CO  .Miss.  s(i:>.  Sep 
AimIicws  v.  C'nii}iar,  L't;  Lawv.  Md.  i»0;  Wiim  v.  llillyrr,  li!  Mo.  .\i»|». 
139. 

Duress.  A  bond  e.\t'cuU'(l  imdcr  the  (iiirt'ss  of  IIk;  principal  is 
void  UH  to  llio  siiiciv  als(»,  if  llic  siiii-ly  adcd  willioiil  i<iio\\  led;.;*' 
<if  lilt'  fact  of  llic  diiri'ss;  and  know  It-d^ic  (jf  llic  ini|iiis(iiini<-ni  does 
not  necessarily  involve  ivMo\vledj;e  of  its  want  of  le;;ality;  but,  if 
tlie  surety  knows  of  the  duress  when  he  undertakes  to  bind  liinisdf, 
the  duress  does  not  ndieve  him.  Patterson  v.  Gibson,  81  Ga.  804, 
10  S.  K.  0;  Osborn  v.  Kobbins,  'M\  .\.  \ .  :{05;  State  v.  Brantley,  27 
Ala.  44;   Fisher  v.  Slialtuck,  17  Pick.  (Mass.)  L'."!'. 

The  reason  for  the  rule  is  that  duiess  is  ilh'jial,  a  contract  i)ro- 
(ured  by  duress  is  coi  rnpt  in  its  orij;in.  and  ilie  wrongdoer  should 
not  be  allowed  to  take  a  benefit  from  his  wronj^ful  act.  Besides,  if 
the  surety  contracts  in  ignorance  of  the  duress,  it  materially  in- 
creases the  i-isk  beyond  that  assumed  in  the  usual  course  of  busi- 
ness of  that   kind.      raM('rs(.n  v.  C.ibson,  81  Ga.  80.").  10  S.  E.  !t. 

Other  authorities,  however,  hold  that  duress  of  the  ]»rincipal  is 
not  an  available  defense  for  the  surety.  Ilauscombe  v.  Standing, 
Crtt.  Jac.  187;  Robinson  v.  Gould,  11  Cush.  i.Mass.i  .j.");  I'.ow- 
maii  V.  Hiller.  i:>0  Mass.  153;  riummer  v.  People,  KJ  III.  358.  Jus- 
tice Paxson,  in  Gritlith  v.  Sitgreaves,  00  Pa.  St.  101,  after  review- 
ing many  cases  of  the  latter  class,  states  that  in  all  of  them  the 
duress  was  either  upon  the  party  seeking  to  avoid  tin-  contract  sued 
on  or  it  was  known  to  him.  See  Fairbanks  v.  Snow,  145  Mass.  154, 
13  N.  E.  5'.m;,  for  a  general  discussion  of  duress,  its  nature  and  ef- 
fect. Both  principal  and  sun-iy  may  be  relieved  by  proof  of  duress 
as  against  both.     V .  S.  v.  Tingey,  5  Pet.  115. 

Ilhgalit)/.  If  the  principal  contract  is  contrary  to  pii}>iic  polic}', 
the  sureties  or  guarantors  are  not  liable,  and  the  same  principle 
applies  where  the  contract  of  suretyshii)  or  guaranty  is  itself  con- 
trary to  public  policy. 

Thus,  if  A.,  having  embezzled  funds  of  B.,  gives  his  note  for  the 
amount  in  settlement,  and  C.  guaranties  the  note  on  condition  that 
A,  shall  not  be  prosecuted,  or  if  a  public  board  illegally  loans  pub- 


10  SL'UKTYSIIir    AM)    (ilAKANTY. 

lif  inoiii'vs  1»>  niic  for  his  |iii\;ilf  use.  iind  t;ik<'S  Imtl,  his  nolo  f(ir 
iIh'  same,  w  hich  a  ihiid  \>:w\\  si^Mis  as  suici  v.  ihr  guarantor  or  sure- 
ty is  not  lialih'.  .Mc.Mahon  v.  Smith,  17  ('oiin.  L'-Jl;  Howard  v. 
Smith  (Ti'X.  Slip.)  :{S  S.  W.  ir>;  lionsc  v.  Mt.hr.  •_".•  111.  .\\>\k  '.V2\  ;  (lor- 
liam  V.  Kc.vt's.  \'M  .Mass.  T^S'A;  Boaid  of  lldmal  ion  of  llaiiford  'Pp. 
\.  TliompsoM.  .■>.■*>  ()hiii  St.  ;iL'l. 

A  promise  h_v  a  pa\<'e  to  have  the  makt  r  appoinii-tl  to  a  jjiiblie 
oHice.  thon^^li  made  to  induce  a  surely  to  siuii.  is,  as  a^^ainst  ])ul)lie 
policy,  void,  and  could  not  (h'ceive  or  defraud  llir  surely,  ("iraliam 
V.  Marks,  1»8  Ga.  CT,  12.".  S.  K.  ii:;i. 

lUit  if  an  administrator,  in  (U(h'r  to  induce  one  to  i^o  upon  his 
ollicial  bond.  de])osits  with  liim  the  funds  of  the  estate  as  security, 
this  does  not  release  the  surety  in  case  of  a  default  on  tlie  part  of 
the  administrator;  for  the  surety,  by  executing  the  bond,  secured 
the  appoinlmeut  of  the  administrator  upon  the  stren<;th  thereof. 
The  givinjj:  of  the  bond  is  lej>al.  and  the  only  iUegality  consists  in 
the  attemjil  to  illegally  protect  the  surely  from  the  legal  liability 
he  assumes. — an  illegality  in  \vhi(di  the  persons  for  whose  benefit  the 
bond  is  given  have  no  part.  Deobold  v,  Ui»permanij,  111  N.  Y.  oM, 
11>  N.  E.  !)4. 

6.  STATUTE  OF  FRAUDS. 

The  English  statute  of  frauds  (L'H  ("ar.  II.  c.  U).  which  is  substan- 
tially followed  by  the  statutes  of  most  (d"  <»ur  states,  juovides.  in 
section  4,  par.  L'.  "that  no  action  shall  be  brought  whereby  to  charge 
•  *  *  the  defendant  upon  any  special  juomise  to  answer  for  the 
debt,  default  or  miscarriage  of  another  i»ersou  •  ♦  *  nnless  the 
agreement  ujion  which  such  action  shall  be  brought,  or  some  m<'m- 
oiaiidum  or  note  tliereof.  shall  be  in  writing,  and  signed  by  the  par- 
ty to  be  charged  iherewith,  or  some  other  person  thereunto  by  him 
law  fully  autluuized." 

(ai  'I'lie  term  "special  prnmise"  is  designed  to  a\(»id  only  such 
promises  as  are  (-specially  and  jiart icularly  to  answer  f(U'  the  debts 
of  olheis.  and  not  tlutse  whicli.  while  incidentally  assuming  the  re- 
sponsibility for  such  debts,  are  wludly  or  |uinci|ia lly  for  the  jmr- 
pc.se  of  pei-f«M-ming  scune  disliiid  obli^Mtion  of  the  promisor. 
Dui'haiii  v.  .Manrow.  '2  S.  V.  :.:'.:'.;  .Mallory  v.  Cilleti,  ijl  X.  Y.  412; 
Suilon   v.  drey  [ls:J4J  1  Q.  B.  285;    Little  v.  Edwards,  Gl)  Md.  4'J!>, 


FoltMATION    OK    TlIK    (  O.NTItACT. 


17 


]»;AI1.1;M;  hnvis  v.  I'anirk,  I  ll  1.  S.  ITIt,  IL'  Sii|..  Ct.  r.S;  Miirlnll 
V.  H<'(U,  ss  -Midi.  ;!l-,  no  N.  W.  ::o.');  I''iisl  .\;il.  I'.iinU  v.  ( 'IimIiimth, 
lUU  N.  \.  •■>.")S,  li4  N.  E.  84.S.  A  con  Mad  of  iciiisiiraiK-c  lias  Ix'cn, 
held  not  wiiliin  the  statute,  liaiilcll  v.  Insurance  Co.,  77  Iowa,  15."), 
41  X.  W.  <i()l.     liiit  seo,  contra,  Ej^aii  v.  liisiiiaiice  Co.,  27  La.  Ann. 

I'lulcr  liiis  rule,  the  holdci'  of  a  not*'  or  oilier  seciiiiiv  is  JMiund 
by  a  verbal  guaranty  of  lis  ]>ayuieut.  made  for  the  jMirpoHe  of  iudu- 
cin;;  aiiolli<'r  lo  purchase  II.  .Milks  v.  Kich,  SO  N.  Y.  2G1);  Car<h-ll  v. 
McXiel,  21  N.  Y.  338;  Darst  v.  IJales,  95  111.  40.3,  at  pafj;e  ."')12.  And 
see,  in  ease  of  assij^nnient  and  {guaranty  of  judgment.  Little  v.  Ed- 
wards, (ID  Md.  41H),  10  Atl.  134.  So.  also,  where  a  person  having 
I»ro|ierly  of  his  debtor  io  sell  for  ]iayiuent  of  the  debt  guaranties 
the  lille  lo  induee  the  ]»rouiisee  to  buy  it.  Farnham  v.  Chaitnum,  01 
Vt.  3l>."'),  18  Atl.  152.  Hut  see  Dows  v.  Swett,  134  Mass.  142.  And 
tlie  promise  by  a  del  credere  agent  to  his  i)rincipal  to  guaranly  the 
solvency  of  the  persons  to  whoni  he  sells  goods  is  not  within  the" 
statute.  Couturier  v.  Hastie,  8  Exch.  40,  5  H.  L.  Cas.  073;  Sher- 
wood V.  Stone,  14  N.  Y.  207;  Wolff  v.  Koppel,  5  Hill  (N.  Y.)  458,  2 
Denio  (X.  Y.)  308;  Swan  v.  Nesmith,  7  Pick.  (Mass.)  220. 

Again,  if  a  creditor  has,  or  is  about  to  file,  a  lien  on  property  ta 
secure  his  claim,  and  a  third  ])erson,  whose  interests  are  or  may  be 
prejudiced  thereby,  guaranties  the  debt  in  consideration  of  a  release 
of  the  lien  or  forbearance  to  file  it,  his  object  is  to  remove  or  pre- 
vent the  lien,  and  the  guaranty  is  merely  incidental,  and  some 
courts  hold  that  it  need  not  be  in  writing  (Fitzgerald  v.  Dressier,  7 
C.  B.  [X.  S.]  374:  Sniilh  v.  Bank,  110  Pa.  St.  508,  1  Atl.  700;  Will> 
V.  Brown,  118  Mass.  138;  Prime  v.  Koehler,  77  N.  Y.  01);  though 
the  weight  of  authority  is  probably  to  the  contrary,  where  the  lia- 
bility of  the  debter  continues  (X^elson  v.  Boynton,  3  Mete.  [Mass.] 
30(5;  Mallory  v.  Gillett,  21  N.  Y.  412;  Bunneman  v.  Wagner,  10 
Or.  433,  18  Pac.  841;  Clark  v.  Jones,  85  Ala.  127,  4  South.  771).  And 
it  has  even  been  held  that  where  the  owner  of  a  building,  on  which 
the  contractu'  has  abandoned  work,  promises  to  ]>ay  I  he  con- 
ti-actor's  workmen  what  is  due  them  from  the  contractor  if  Ihey  will 
go  on  with  ihe  work,  the  undertaking  is  original;  or  to  ]iay  a  ma- 
terial man  if  lie  will  continue  to  supply  materials  to  tlie  contractor 
if  the  contractor  fails  to  ])ay  as  agreed.     Kaabe  v.  Squier,  148  X.  Y. 

81,  42  N.  E.  510;    Andre  v.  Bodman,  13  Md.  241.      In  this  latter 
SUR.&  G.-2 


18  SURETYSIIII'    AND    (ilAKANTY. 

•  ase  llir  claiiii  a^xaiiist  tlir  coiil  lador.  it  serins,  was  <,^ivcn  up.  so 
that  their  MO  l(»ii^^fr  cxislfd  aiiv  priiuai.v  lialtilily  (if  a  ihiid  prison. 
Crawford  v.  Kilisoii.  1.")  Ohio  Si.  L*:?!!,  i:'.  X.  11.  SO;  ( lirninii^^h  v. 
Kirhholtz  (Ta.  Snp.i  l.~)  All.  TTJ;  Vruiiiaii  v.  .Miirlhr,  :*.:'  Mo.  App. 
:\[:\:  r.urhanaii  v.  .Moraii.  ('>-  Conn.  S."!,  L'r>  .\ll.  ;'.!»<;.  P.nl  Ihr  (((ii- 
naiv  has  hrrii  lirhl.  Srr  l^inihani  v.  Davis.  T'.>  Me.  li-Sli,  *.»  Atl.  Tl'.'.; 
Cirrnc  V.  Latchani,  '2  Coht  .\pp.  4H;.  .'51  I'ac  '2:\P^.  Wlin-.-  a  widow, 
roiitinninj;  hor  (Ircrasrd  hnshand's  business,  ]»roinisr(i  hrr  lius- 
Itand's  (Tcdilor  to  pay  liis  (h'lH  if  hr  woiihi  sril  hrr  ^iOdds  on  (  ivdil, 
(hi-  iiromisr  was  hrld  lo  lir  wiihiii  ihr  sialuir.      Kupi>r  v.  Tetcrson, 

•  iT  .Mirh.  j::7,  ;{.■■)  N.  W.  S-.  And  ser  I )iriin<;(i'  v.  Moynihaii  (Com. 
I'l.i  1(1  N.  V.  Sui>i».  .~)40. 

(10  ''Drhf,  <J,faHlt,  or  misnirrJiKir.''  The  words.  "deM.  d(>t'aiilt, 
«>r  iniscaniage,"  soriu,  as  said  by  Dr  <'(»!.  Cuar.  ^:  Sur.  p.  r.l,  to 
••point  t(»  three  distinct  kinds  of  jiuaranty.  namely:  ill  (luai^anties 
lor  the  payment  of  a  'debt"  already  eonti-acted  by  another  ])ei-son; 
(L'l  -iiiaianties  against  the  'default'  of  anotber  pei-.son,  i.  e.  for  the 
j.a.Mneiit  of  debts  to  be  con  traded  by  another  jierscm.  or  against  loss 
I  hat  may  occur  from  another's  future  breach  of  duty;  and  i:^l  guar- 
anties against  the  'miscarriage'  of  another  i)erson,  i.  e.  against  loss 
that  may  occur  from  another's  jtasi  or  future  breaches  of  duty." 
The  exact  sense  intended  by  the  framers  of  the  act  to  be  attributed 
lo  each  of  these  words,  respectively,  has  been  a  subject  of  freipuMit 
speculation  and  some  doubt.      Throoi),  Verb.  Agreem.  192. 

However,  it  is  settled  that,  taken  togelhri'.  thry  include^  all  lia- 
bilities (»f  a  third  person,  however  they  may  arise,  and  therefore 
iiK  lude  liabilities  arising  out  of  a  wrong  act  or  tort  as  wtdl  as  Ih;  se 
arising  out  of  contract.  Kirkham  v.  Marter,  L*  r.arn.  ^:  Aid.  til:'.. 
.\nd  ^i-i-  Tnriirr  v.  llubbell.  2  Day  (Conn.)  4.17;  Mountsteithen  v. 
Lakeman.  L.  K.  7  (2-  l».  -"•_.  They  also  include  pros]>ective  as  w<'ll 
as  existing  liabililies.  "If  the  fnlnrr  ])rimary  liability  of  a  princi 
pal  is  c()nteni|ilated  as  the  basis  of  ih.  i.roniise  of  a  gnaiaiilor.  such 
promise  is  within  I  he  slatute  of  frauds.  i»recisely  as  it  would  be 
if  tlie  liability  existed  when  the  pidinise  was  made."  Mead  v.  Wat- 
son. ri7  \t.  I'Jt;.  .\nd  see  .Matson  v.  Whaiani.  L'  'reini  Iv.  SO;  .Mai 
thews  V.  .Milton.  I  ^  •!■;;.  I'i'eiin.i  ."»7(;.  .\  |ir(»mis<'  b\  one  person  1<> 
indemnify  another  for  bee ing  a  guarantor  for  a  lliird  is  not  with- 
in the  statute.     Jones  v.  iiacon,  14u  N.  Y.  44(i,  lo  N.  !■:.  L'iG. 


FORMATION    OK   THK    CONTKACT.  19 

(c)  ''''Of  another perxony  Tlic  promise  coiitcmjdatcMl  hy  the  stat- 
ute is  a  j)r(Hiiis('  lo  answer  fur  ilic  (icl)l,  dcfanli .  (tr  iiiisciiiiiaj^c  of 
"anotlH'i-  person";  or,  in  other  \vor<ls,  a  eonlract  of  guaranty  or 
suretyHliip.  The  statute  does  not  apply  to  original  |)i()niiscs  or  un- 
dertakings, though  the  benefit  accrues  to  another  than  iIh-  i»roniisor. 
There  must  be  three  parties  in  conteniplation, — a  jx-rson  wlio  is 
actually  or  j)rospectively  liable  lo  another  person,  and  a  third  i)er- 
son  who  ])roniises  the  creditor  to  answer  for  the  debt  or  liability; 
or,  in  otlit'i-  words,  a  ci'editor,  a  pi'incipal  debtor,  and  a  <;naiantor 
of  the  debt,  or  surety.  Though  there  is  considerable  conflict  be- 
tween the  courts  in  their  construction  of  this  clause  of  the  statute, 
the  following  rules  for  determining  whether  a  contract  comes  with- 
in it  are  established  by  the  weight  of  authority: 

(d)  There  must  be  either  a  present  or  prospective  liability  of  a 
third  person  for  which  the  promisor  agrees  to  answer.  If  the  })rom- 
isor  becomes  himself  i»rinKuily,  and  not  collaterally,  liable,  tUe 
pi-oniise  is  not  within  the  statute,  though  the  benefit  from  the  trans- 
action accrues  to  a  third  person.  Baldwin  v.  lliers,  7o  Ga.  73f); 
Morris  v.  Osterhout,  55  Mich.  262,  21  N.  W.  339;  De  Witt  v.  Root, 
18  Neb.  567,  26  N.  W.  360.  Where  an  agent  has  become  liable  to 
his  principal  by  lending  money  contrary  to  instructions,  his  guar- 
«nty  of  the  loan  is  not  within  the  statute.  Crane  v.  Wheeler,  48 
Minn.  207,  50  N.  W.  1033.  A  promise  by  a  married  woman  to  pay 
her  parent  for  her  sup]>oi-t  was  held  a  ])romis(^  to  pay  her  husband's 
debt.  Perkins  v.  Westcoat,  3  Colo.  App.  338,  33  Fac.  139.  If.  for 
instance,  two  persons  come  into  a  store,  and  one  buys,  and  the  oth- 
er, to  gain  him  credit,  promises  the  seller,  "If  he  does  not  pay  you, 
I  will,"  this  is  a  collateral  undertaking,  and  must  be  in  writing; 
but  if  he  says,  "Let  him  have  the  goods,  and  I  will  pay,"  or  "I  will 
see  you  paid,''  and  credit  is  given  to  him  alone,  he  is  himself  the 
buyer,  and  the  undertaking  is  original.  Birkmye  v.  Darnell,  1  Salk. 
Ii7;  Hartley  v.  Varner,  88  111.  561;  Nelson  v.  Boyntou,  3  Mete.  (Mass.* 
.396;  Greene  v.  Burton,  59  Vt  423,  10  Atl.  575;  Geelan  v.  Reid,  22 
111.  App.  165;  Higgins  v.  Hallock,  60  Hun,  125,  14  N.  Y.  Supp.  550; 
Boston  V.  Farr,  148  Pa.  J^t.  220,  23  Atl.  901;  Crowder  v.  Keys.  91 
Ga.  180,  16  S.  E.  986;  Mountstephen  v.  Lakeman,  L.  R.  7  H.  L.  17. 
And  see  cases  cited  above  and  in  the  following  notes.  In  other 
words,  whether  the  jiromise  in  such  a  case  is  within  the  statute  de- 
pends on  how  the  credit  was  given.     If  it  was  given  exclusively  to 


'20  SUUKTYSIIir    AND    GUAUAMY. 

tlir  jtroiiiisdi'.  liis  niKlcrlakinu  is  oiiuiiial  (Chase  v.  l)av.  17  Julius. 
[X.  v.]  Ill;  Morris  v.  Oslcihoiii.  .".r.  Midi.  l!(iL*.  lil  N.  W.  ;',:!II;  Lar- 
son V.  Jensen,  53  Mich.  427,  1!»  N.  \V.  lliO;  Hartley  v.  ^'arIl(■r,  88 
111.  nci:   MuT  V.  GratUiii,  :U  Md.  ar>(»;   Grant  v.  Wolf.  ::4  .Minn.  32, 

21  N.  W  .  2s:>;  Kllis  V.  Murray,  77  Ua.  542;  Hake  v.  Solomon.  (>2 
Mich.  ;:77.  2S  X.  W.  !)()S;  lla/eltine  v.  Wilson,  55  X.  J.  Law.  250, 
2i'.  At).  7!it;  ItiK  it  is  colhitcral  if  any  credit  was  given  to  the  other 
l.arry  (Welch  v.  Marvin,  ;!(;  Mich.  51);  Cahill  v.  T.igelow,  18  Pick. 
[Mass.]  :i(;!l;  Xorris  v.  (Jrahani,  33  Md.  5<;;  Matthews  v.  Milton,  4 
Yerg.  [Tenn.]  57C»;  llaldwin  v.  Hiers,  73  Ga.  739;  Langdon  v.  Rich- 
ardson, 58  Iowa,  010,  12  X.  W.  622;  Bugbee  v.  Kendricken,  130  ^[ass. 
437;  .Alead  v.  Watson,  57  Vt.  42G;  Stndley  v.  Bartb,  54  Mich.  0,  1!) 
X.  W.  5(i8;  Robertson  v.  Hnnter,  20  S.  C.  9,  6  S.  E.  850). 

(e)  Even  though  there  is  an  existing  liability  of  a  third  person  for 
which  the  promisor  undertakes  to  answer,  still  the  promise  is  not  with- 
in the  statute,  if  the  terms  are  such  that  it  effects  an  extinguishment  of 
such  liability;  in  other  words,  the  liability  of  the  original  debtor  must 
continue.  A  promise  to  i)ay  another's  debt  in  consideration  of  the 
creditor's  doing  something  wliich  will  extingiiisli  his  claim  against  the 
debtor,  and  release  him  absolutely,  need  not  be  in  writing.  Mallory 
V.  Gillett,  21  N.  Y.  412;  Goodman  v.  Chase,  1  Barn.  &  Aid.  207; 
Teeters  v.  Lamborn,  43  Ohio  St.  144,  1  X.  E.  513;  Andre  v.  Bodman, 
1.".  Md.  241;  Meriden  Britannia  Co.  v.  Zingsen,  48  N.  Y.  247;  Curtis 
\.  Brown,  5  Cush.  (Mass.)  488;   ]Mulcrone  v.  Lmnber  Co.,  55  ^lich.  022, 

22  X.  W.  07;  liunde  v.  Runde,  50  111.  08;  AMiit lemon,'  v.  Wenlworth, 
70  Me.  20;  Green  v.  Solomon,  80  Mich.  234,  45  X.  W.  87;  Carlisle  v. 
( 'amplK'll,  70  Ala.  247.  To  take  the  promise  out  of  the  statute,  the 
oiiginal  debtor's  release  must  be  absolute.  If  the  creditor  may  still 
hold  him  liable  at  his  option,  the  jirondse  nuist  be  in  writing.  Nel- 
son V.  r.oynton,  3  M«'tc.  (Mass.)  ;;00;  Welch  v.  Marvin,  30  Mich.  50; 
Waggoner  v.  Gray,  2  H.'n.  .^'  M.  (Va.)  012;  Willard  v.  Bosshard,  08 
Wis.  454,  .32  N.  W.  538;  Hill  v.  Frost,  50  Tex.  25;  IMalf  v.  Cummings, 
07  .Mi.h.  14.3,  34  N.  W.  281.  The  fad  that  a  lien  against  the  original 
(lel)tor  is  released  has  been  held  immaterial,  if  the  debtor  himself  re- 
main liable,  X'^elsou  v.  l?oynton,  snjira;  Alallory  v.  Gillett,  21  N. 
y.  412.  A  promise  to  jiay  another's  debt  merely,  if  tlie  |iioniisee  will 
forbear  to  sue  the  debtor,  which  he  does,  is  within  the  statute.  Gump 
v.  ilalberstadt,  15  Or.  :'.5(;,  15  I'ac.  407,  containing  a  collection  of  thc^ 


FORMATION    OK    TIIK    CONTRACT.  21 

cases  on  this  point;  Watson  v.  Randall,  20  Wend.  (N.  Y.)  201;  While 
V.  Rintoul,  108  N.  Y.  L'22,  1.5  N.  E.  ;{18.  Novalioiis  fall  williin  this 
class  of  a<;r('«'iii('nts. 

(f)  The  |)i(nnis('  must  ('oiitciupliilc  iciyiiiciit  Ii.v  (lie  pi-oiiiis(ir  out  of 
his  own  projKM'ty,  or,  at  least,  not  out  of  the  property  of  the  debtoi', 
from  which,  or  from  the  proceeds  of  which,  the  promisor  is  under  a 
duty  to  pay  or  is  authorized  to  pay;  for  in  such  a  case  the  payment  is, 
in  effect,  by  (he  dclilor.  The  statulc  lias  no  ap])lication  to  ''cases 
where  the  original  debtor  [ilaces  projjerty  of  any  kind  in  the  hands  of 
a  third  person,  and  that  person  promises  to  pay  the  claims  of  a  particu- 
lar creditor  of  the  debtor.  The  promise,  in  such  case,  is  an  ori^^inal 
promise,  and  the  jjroperty  placed  in  his  hands  is  its  consideration.  In 
this  class  of  cases  it  is  immaterial  whether  the  liability  of  the  orij^inal 
debtor  continues  or  not."  Mallory  v.  Gillett,  21  N.  Y.  412;  Wait  v. 
Wait,  28  Vt.  350;  Belknap  v.  Bender,  75  N.  Y.  446;  First  Nat.  Bank 
of  Sing  Sino;  v.  Chalmers,  144  N.  Y.  432,  39  N.  E.  331;  Fehlinger  v. 
Wood,  134  Pa.  St.  517,  19  Atl.  746 ;  Sext  v.  Geise.  80  Ga.  098,  6  S.  E. 
174.  But  see  Gower  v.  Stuart,  40  Mich.  747;  Frame  v.  August,  88 
111.  424. 

(g)  A  promise  to  pay  another's  debt,  to  come  within  the  statute, 
must  be  made  to  the  creditor,  and  not  to  the  debtor.  A  promise  to 
the  debtor  himself  to  pay  his  d(4it  for  him  does  not  require  writing. 
Eastwood  V.  Kenyon,  11  Adol.  &  E.  438;  Windell  v.  Hudson.  102  Ind. 
521,  2  N.  E.  303;  Alger  v.  Sqoville,  1  Gray  (Mass.)  391,  395.  Illustra- 
tions of  this  are  where  a  person  buys  land  or  goods,  and  agrees  to  pay 
the  purchase  money  to  a  creditor  of  the  seller,  or,  as  part  of  the  con- 
sideration, assumes  a  mortgage  or  other  indebtedness  of  the  seller. 
This  is  no  more  than  a  promise  to  pay  the  promisor's  own  debt  in  a 
particular  way.  Wilson  v.  Bevans,  58  111.  232;  Clinton  Xat.  Bank  v. 
Studemann,  74  Iowa,  104,  37  X.  W.  112;  Delp  v.  Brewing  Co.,  123 
Pa.  St.  42,  15  Atl.  871;  Bateman  v.  Butler,  124  Ind.  223,  24  N.  E. 
989;  Price  v.  Reed,  38  Mo.  App.  489;  Hooper  v.  Hooper,  32  W.  Va. 
526,  9  S.  E,  937.  Nor  is  a  promise  to  indemnify  or  save  another  harm- 
less from  any  liability  which  he  may  incur  as  the  result  of  a  transac- 
tion into  which  he  enters  at  the  instance  of  the  promisor,  as  in  the 
case  of  a  promise  to  indemnify  the  promisee  against  loss  from  going 
bail  for  another,  within  the  statute.  Anderson  v.  Spence,  72  Ind. 
315;   Aldricli  v.  Ames,  9  Gray  (Mass.)  70;   Thomas  v.  Cook,  8  Barn. 


22  SUUKTYsniP  AND  GUARANTY. 

\-  C.  728:  Hoainaii  v.  Hnssdl.  L'O  Vt.  2(1.-);  liarry  v.  Ransom,  12  N.  Y. 
4«>2.  So,  also,  a  iiroinisc  made  to  a  debtor  to  iiuloiniiifv  him  ajiainst 
any  claim  aiisinu  from  liis  debt  is  not  within  the  statntc,  whiTi'  the 
|ii(imisoi'  (hits  iidi  bfctinic  liabh-  to  the  creditor.  Conkey  v.  Hopkins, 
17  Johns.  (X.  V.)  iVA;  Weld  v.  Nichols.  17  Pick.  (Mass.)  538.  It  is 
nolliinjj  more  than  a  promise  to  pay  a  prospective  debt  of  the  promisee. 
It  has  been  souj;ht  in  some,  if  not  most,  of  the  books  to  distinguish 
betwet'n  contracts  within  the  slatnle  and  conlracts  of  indemnity  by 
saying,  witliont  qualification,  that  a  promise  of  indenuuty  is  not  with- 
in the  statute;  but  this  may  mislead.  Such  a  promise  to  indemnify 
the  promisee  against  any  liability  wliich  he  may  incur,  as  we  have 
mentioned,  is  not  witliin  the  statute;  but  it  is  otherwise  where  the 
j)romise  is  to  indemnify  the  promisee  against  any  loss  he  may  sustain 
by  reason  of  the  default  or  miscarriage  of  a  person  under  liability  to 
him.      Nugent  v.  Wolfe,  111  Pa.  St.  471,  4  Atl.  15;  Mallory  v.  Gillett, 

21  N.  Y.  412;  Cheesman  v.  Wiggins.  122  Ind.  352,  23  N.  E.  945.  In 
jurisdictions  where  acceptances  of  bills  of  exchange  are  not  required  to 
be  in  writing,  or  the  statutes  do  not  otherwise  modify  the  common 
law,  parol  acceptances,  if  assented  to  by  the  holder,  are  permitted. 
Scudder  v.  Bank,  91  U.  S.  406;  Stock  well  v.  Bramble,  3  Ind.  428;  Ex- 
change Bank  v.  Rice,  98  Mass.  288. 

PRINCIPLES  OF  CONSTRUCTION. 

7.  (a)  The  liability  of  a  surety  or  guarantor  is  strictissimi  juris, 
and  he  is  not  to  be  held  liable  beyond  the  precise  stipulations  of 
his  contract.  Douglass  v.  Reynolds,  7  Pet.  125;  Hopewell  v.  Mc- 
Crew,  50  Neb.  789,  70  N.  W.  397;  Markland  Min.  &  Mfg.  Co.  v. 
Kimmel,  87  Ind.  5G0. 

This  does  not  mean  that  a  different  rule  must  be  applied  in  the 
construction  of  such  contracts  from  that  which  is  to  be  applied  in 
the  construction  of  contracts  in  general.  Like  all  other  contracts, 
they  must  be  construed  fairly  and  reasonably,  and  according  to  the 
i.rtention  of  the  parties.  But  when  the  meaning  of  the  language 
used  has  been  thus  ascertained,  the  responsibility  of  the  guarantor 
or  surety  is  not  to  be  extended  or  enlarged  by  implication  or  con- 
struction, and  is  strictissimi  juris.    People  v.  Hackns,  117  N.  Y.  19(5, 

22  N.  E.  759;   Northern  Light  Lodge  No.  1,  L  O.  O.  F.,  v.  Kennedy 


LIARII.ITY  OF  sl'rp:ty   ou  guauantor.  23 

(N.  D.)  73  N.  W.  524;  Locke  v.  McVcan,  'Xi  Mich.  473;  Weiler  v. 
Henarie,  15  Or.  2S,  Vi  Pac  (111. 

(l»)  If  the  pliraseohj^ry  of  a  coiiliacl  of  giiaraiily  or  siirciyship  is 
so  ambiguous  as  not  to  furnish  conchisive  evidence  of  its  meaning, 
light  may  be  sought  from  the  extrinsic  circumstances.  Evansville 
Nat.  Bank  v.  Kanfniann.  03  N.  Y.  2S1. 

(>•)  If,  as  tlins  inlcrjueted,  the  contract  is  still  fairly  open  to  ditfer- 
«iit  conshnciious.  il  is  to  be  interpreted  most  strongly  against  the 
surety  or  guarantor,  because  it  was  he  who  adopted  the  phraseology. 
Lawrence  v.  McCalmont,  2  How.  426;  Hargreave  v.  Smee,  0  Bing. 
244;  Belloni  v.  Freeborn,  03  N.  Y.  388;  Smith  v.  Mollesun,  148  N.  Y. 
241,  42  N.  E.  669. 


LIABILITY  OF  SURETY  OR  GUARANTOR. 
8.  WHEN  DOES  THE  LIABILITY  ARISE. 

The  surety,  being  a  debtor  from  the  beginning,  must  see  that  the 
debt  is  paid,  and  his  liability  to  pay  the  debt  himself  arises  as  soon 
as  it  is  due.  The  guarantor  is  not  liable  until  after  the  principal 
has  failed  to  perform,  and  even  then  his  obligation,  at  least  theo- 
retically, is  not  to  pay  the  debt,  but  to  answer  for  the  conse- 
(piences  of  the  default.  In  a  guaranty  of  collection,  he  is  only  liable 
after  the  appropriate  means  of  collecting  from  the  principal  have 
been  exhausted;  while  in  a  guaranty  of  payment  his  liability  arises 
immediately  upon  default,  subject,  in  certain  cases  elsewhere  con- 
sidered, to  his  right  to  have  demand  made  upon  the  principal  and 
notice  of  default  given  to  himself.  Saint  v.  Manufacturing  Co.,  9.5  Ala. 
371,  10  South.  530;  McMurray  v.  Noyes,  72  N.  Y.  525;  Mc^Millan  v. 
Bank,  32  Ind.  13.  Compare  Campbell  v.  Sherman,  151  Pa.  St.  70,  25 
Atl.  35;  and,  as  to  the  Pennsylvania  cases,  see  Walton  v.  Mascall,  13 
Mees.  &  W.  (Hare  &  W.  Am.  Ed.)  p.  72,  note. 

The  prospective  obligation,  however,  both  of  surety  and  guarantor, 
exists  as  soon  as  their  contract  is  complete.  Davis  Sewing  Mach. 
Co.  V.  Richards,  115  U.  S.  527,  6  Sup.  Ct.  173;  City  Nat.  Bank  of 
Poughkeepsie  v.  Phelps,  86  N.  Y.  493;  Mussey  v.  Bayner,  22  Pick.  223; 
Keunaway  v.  Treleavan,  5  Mees.  &  W.  498. 

By  the  general  rule  of  law,  a  covenant  to  indemnify  against  a 


24  SUKKTYSllU^    AM)    GUARANTY. 

fii(ur(»  jndunu'iit,  clinr^t',  or  liability  is  broken  by  tlio  rocovory  of 
a  judiiuuMit,  or  tlic  lixiii^j;  of  a  charj^c  oi-  liability  in  tlic  mailer  to 
which  the  covenant  relates.  When  the  covenant  is  cnc  of  indemnity 
ai^ainsi  the  recovery  of  a  jndgment,  the  cause  of  action  on  the  eove- 
iiani  is  coniph'te  the  moment  the  judjiinent  is  recovered,  and  an 
action  for  danui}2;es  may  bo  immediately  nniintained  thereon,  meas- 
nred  by  the  amount  of  the  jnd;^nient ;  and  this,  altlionjih  the  judji- 
nicnt  lias  not  been  jtaid  by  the  covenanlee,  and  allli(iui;li  the  cove- 
nantor was  not  a  party,  or  liad  no  notice  of  the  former  action.  Tlie 
covenantor,  in  an  action  on  a  covenant  of  general  indemnity  against 
judgments,  is  concluded,  by  the  judgment  recovered  against  the  cov- 
enantee, from  questioning  the  existence  or  extent  of  the  covenantee's 
liability  in  the  action  in  which  it  was  rendered.  The  recovery  of 
a  judgment  is  the  event  against  which  lie  covenanted,  and  it  would 
contravene  the  manifest  intention  and  ])nrpose  of  the  indemnity  to 
make  the  right  of  the  covenantee  to  maintain  an  action  on  the  cove- 
nant depend  upon  the  result  of  the  retrial  of  an  issue  which,  as 
against  the  covenantee,  had  been  conclusively  determined  in  the 
former  action;  always,  however,  saving  the  right,  as  the  law  must 
in  every  case  where  the  suit  is  between  third  })ersons,  to  contest  the 
proceeding,  on  the  ground  of  fraudulent  collusion,  for  the  purjiose  of 
charging  the  surety.  A  judgment  by  default  or  on  consent  is  also 
covered  by  the  covenant,  but  in  such  cases  is  only  presumptive  evi- 
dence against  the  sureties.  Conner  v.  Reeves,  W,i  X.  Y.  527,  9  N.  E. 
4:51). 

The  cases  relating  to  bonds  conditioned  on  the  faithful  perform- 
ance of  duty  by  officials  present  certain  peculiarities  because  of  the 
fact  that  the  statutes  under  which  they  are  usually  given  vary  in 
their  terms.  Accordingly,  the  bond  may  go  into  effect  from  its 
date,  or  upon  delivery,  or  upon  acceptance  by  the  government,  or 
otherwise,  as  afl'ected  by  sjiecial  circumstances,  or  as  specified  or  im- 
jdied  in  the  statutes  govei'iiing  a  given  case,  liroome  v.  T''^.  S.,  15 
How.  143;  U.  S.  v.  Le  liaion,  1!>  How.  73;  .T<:tna  Life  Ins.  Co.  v. 
American  Surety  Co.,  'M  Vrd.  2!)!);  Dawes  v.  Kdes,  K!  Mass.  177; 
lleiljy  V.  Dodge,  42  Hun,  tUt;. 

And  after  the  bond  goes  into  cITect,  il  may  relate  back  to  cover  a 
pciiod  ((mtcmplatcd  by  ils  terms.  J-^lna  Life  Ins.  Co.  v.  ,\nierican 
Surely  Co..  'M  Fed.  2!l!);  Dawes  v.  Kdes,  i:'.  .Mass.  177;  Clioate  v. 
Arrin;rlon,  1  Hi  Mass.  557. 


LIAnil.ITY    OF    Sl'KKTY    OK    Cl'AUANTOR.  25 

NegoUahillty  and  axx)<in(il)ilihi.  Jn  considering  tlic  (niostion  of  the 
transfer  from  one  person  to  anollici-  of  tlie  benefit  of  a  guaranty,  or 
of  ri<>hts  arisinif  (heicfroni,  it  is  inijKn'tant  to  dislin^uisli  hclwecii 
negotiability  and  nu'ic  assi<j;nability.  Xej^otiabilily  is  llie  pccidiar 
■oharaeteristic  of  conunereial  paper,  by  virtue  of  whicli  the  indorsee 
before  maturity  and  for  value  takes  the  thin<;  transferred  free  from 
equities  existini;'  between  the  original  parties.  The  term  "assij^Ti- 
ment"  relates  to  a  transfer  by  whieh  the  transferee  merely  stej^s  into 
the  shoes  of  his  transferror,  and  is  thus  affected  by  equities  which 
mi<iht  have  been  set  up  aj^ainst  the  latter  if  no  transfci-  had  been  made. 
Trust  Co.  V.  National  liank,  101  U.  S.  71. 

It  was  probably  the  common-law  rule,  in  the  first  instance,  that  no 
assignee  of  the  benefits  of  a  contract  could  sue  for  and  recover  them. 
2  Rand.  Cora.  Paper,  290. 

The  primitive  view  was,  in  the  first  place,  that  the  contract  created 
a  strictly  personal  obligation  between  the  creditor  ^nd  the  debtor,  and 
also  that  the  assignment  of  choses  in  action  would  increase  litigation, 
— a  reason  which  led  the  courts  to  set  their  faces  resolutely  against 
it.      Pol.  Cont.  207;   Beecher  v.  Buckingham,  18  Conn.  110. 

And  whether  from  reasons  of  business  expediency,  or  because  they 
^'ere  influenced  by  equitable  doctrines,  is  not  clear,  but  the  courts  of 
■conunon  law,  at  an  early  day,  modified  this  rule  into  one  that  for  a 
long  time  prevailed,  namely,  that  an  assignment  of  a  contract  might 
be  made,  but  the  assignee  must  sue  for  its  benefit  in  the  name  of  the 
-assignor  or  his  representatives.  The  theory  was  that  the  courts  of 
common  law  would  so  far  take  cognizance  of  equitable  rights  created 
by  the  assignment  that  the  name  of  the  assignor  might  be  used  as  a 
trustee  of  the  benefits  of  the  contract  for  the  benefit  of  the  assignee. 
Caister  Parish  v.  Eccles  Parish,  1  Ld.  Baym.  G83;  McWilliams  v. 
Webb,  32  Iowa,  577;  Halloran  v.  Whitcomb,  43  Vt.  306;  Fay  v.  Guy- 
non,  131  Mass.  31. 

This  doctrine  has  been  generally  modified  by  statutes,  the  common- 
est ones,  in  the  United  States,  being  the  provisions  of  the  various 
Codes  that  ''every  action  must  be  prosecuted  by  the  real  party  in  inter- 
est," and  that  the  "transfer  of  every  claim  or  demand  passes  an  interest 
which  the  transferee  may  enforce  by  an  action  in  his  own  name,  as 
the  transferror  might  have  done."  With  courts  of  equity,  it  is  true, 
the  rule  was  different;   for  in  equity,  from  immemorial  times,  the  as- 


-^  SURETYSHIP    AND    GUARANTY. 

si^Miiuont  (if  a  chose  in  ad  ion  or  of  llio  benefits  under  a  contract  haS" 
Itt'i'U  perniiltod.  and  the  assignee  could  maintain  a  suit  in  etjuity  in 
his  own  nanu'.  ISniith  v.  Jhiltain,  ,'J8  X.  C.  .'547;  Tibbots  v.  Gerrish. 
lT)  X.  11.  41. 

Ihit.  liowcvcr  salutary  the  ojxiation  of  this  equitable  rule  iuij;ht 
have  been  in  some  phases  of  the  enforcement  of  contract  rights,  it 
could  have  had  little  inlluence  with  bills  and  notes.  Cases  arisinj.;' 
upon  them  came  within  the  cognizance  of  the  courts  of  common  law. 
And  there  are  cases  to  show  that  even  when  the  assigned  nonnegotia- 
l»le  promise  was  to  pay  a  sum  of  money  to  the  jtromisee,  or  to  bearer, 
or  to  order,  or  where,  by  any  other  form  of  words,  the  instrument  pur- 
ported to  be  made  assignable,  even  then  the  holder  could  not  sue  in 
his  own  name,  but  only  in  that  of  his  assignor.  Coolidge  v.  Kuggles, 
l.~)  Mass.  ."{ST;  Clark  v.  King,  2  Mass.  524;  ^Yeidler  v.  Kauffman,  ]4r 
Ohio,  455;  Jones  v.  Carter,  8  Q.  B.  134. 

There  were  other  rules  relating  to  the  transfer  of  ordinary  contracts,^ 
governing  alike  courts  of  common  law  and  equity,  which  were  of  greater 
{iractieal  importance.  The  tu'st  is  the  doctrine  of  notice.  The  rule 
governing  assignment  is  that  title  in  third  parties,  as  against  the 
debtor,  is  not  complete  without  notice  to  him.  Naturally,  as  the  re- 
sult of  this  rule,  follows  the  one  that  a  debtor  who  performs  his  con- 
tract to  the  original  creditor,  without  notice  of  any  assignment  by  the 
creditor  to  another  person,  is  released  from  his  obligation  under  it. 
Judsou  V.  Corcoran,  17  How.  612;  Vanbuskirk  v.  Insurance  Co.,  14 
Conn.  141;  Smith  v.  Ewei-.  22  Pa.  St.  110;  :Merchants'  &  Mechanics" 
Bank  of  (Jhicago  v.  Hewitt.  '.\  Iowa,  9:^;  Winberry  v.  Koonce,  S.'>  N. 
C.  351;  Hobson  v.  Stexcnson,  1  Tenn.  Ch.  203;  Richards  v.  Griggs, 
10  Mo.  410. 

The  ruh's  in  regard  to  negotiability  are  in  sharp  contrast  to  the  prin- 
liplcs  governing  assignments.  ^Vith  instruments  made  payable  in 
l)lank  oi-  to  bearer,  the  debtor  is  prima  facie  protected  in  payments 
u|ioii  negotiable  bills  and  notes  made  to  the  person  who  has  the  in 
stiunient  in  his  possession.  Pettee  v.  Prout,  3  Gray  (Mass.)  502; 
Way  V.  Hichardson,  Id.  412;  Garvin  v.  Wiswell,  83  111.  215;  Jevvett 
v.  Cook,  81  111.  2(;(»;  Collins  v.  Gilbert,  !)  t  C.  S.  753;  Rubey  v.  Culbert- 
son,  35  Iowa,  2()4;  Kcton  v.  Harlan.  2(1  Kan.  I."'i2;  Wells  v.  Schoonover, 
!»  Ileisk.  (Tenn.j  800. 

The  last,  and  perhaps  most  important,  distinction  made  between  the 


I.IAIULITY    OK    yUKKTY    OK    CUAKANTOU.  27 

transfers  of  nonnegotiable  coMtracts  and  those  of  n^otiablc  l)illH  and 
notes  is  that  in  case  of  the  former  the  a8si}:;nee  takes  subject  to  tin* 
equities  or  defenses  existing  between  the  prior  parties,  while  the  bona 
tide  holder  of  a  negotiable  instrument  may  disregard  these  e(piities. 
and  recover,  upon  suit,  the  full  amount  called  for  by  the  instrument 
he  buys.  According  to  Dwight,  C.  (Trustees  of  Union  College  v. 
Wheeler,  61  K  Y.  101),  the  assignee  of  a  non-negotiable  contract  take» 
subject,  not  only  to  the  equities  existing  between  the  original  parties, 
but  also  must  always  abide  the  case  of  the  person  from  whom  he  buys. 
The  holder  of  a  chose  in  action  cannot  alienate  anything  but  the  bene- 
ficial interest  he  possesses.  Warner  v.  Whittaker,  G  Mich.  i:>;{;  Selig- 
man  v.  Ten  Eyck's  Estate,  49  Mich.  104,  13  N.  W.  377;  Shotwell  v. 
Webb,  23  Miss.  375;  Howell  v.  Medler.  41  Mich.  G41,  2  N.  W.  911; 
Ayres  v.  Campbell,  9  Iowa,  213;  Tinnus  v.  .Shannon,  19  Md.  296;  State 
Mut.  Fire  Ins.  Co.  v.  Roberts,  31  Pa.  St.  438;  Cary  v.  Bancroft,  14 
Pick.  (Mass.)  315;  Harwood  v.  Jones,  10  Gill  &  J.  (Md.)  404;  Scott 
V.  Shreeve,  12  \Mieat.  605. 

It  is  a  question  of  power  or  capacity  to  transfer  to  another,  and  that 
capacity  is  to  be  exactly  measured  by  his  own  rights.  This  is  un- 
doubtedly the  law  in  England  and  in  New  York,  though  in  many  of 
the  states  of  the  Union  the  great  authority  of  Chief  Justice  Kent  has 
prevailed  to  limit  the  equities  to  those  existing  between  the  original 
I)arties,  and  does  not  extend  them  to  those  existing  in  favor  of  third 
parties.  The  technical  or  theoretical  reason  of  the  rule  is  that  given 
by  Judge  Story  (Eq.  Jur.  §  1040):  "Every  assignment  of  a  chose 
in  action  is  considered  in  equity  as  in  its  nature  amounting  to  a  dec- 
laration of  trust,  and  to  an  agreement  to  permit  the  assignee  to  make 
use  of  the  name  of  the  assignor  in  order  to  recover  the  debt,  or  to  re- 
duce the  property  into  possession."  This  theory  leads  to  the  conclu- 
sion that  the  action  by  the  assignee  must  be  precisely  commensurate 
with  that  of  the  assignor,  as  it  must  be  in  his  name,  and  on  the  sup- 
position that,  for  the  purposes  of  the  action,  he  is  still  the  owner. 

As  to  the  negotiability  of  guaranties  indorsed  on  or  referring  to- 
negotiable  paper,  the  authorities  are  in  some  respects  contiicting. 
Daniel,  Xeg.  Inst.  §§  1774-1784. 

(1)  A  guaranty  of  a  negotiable  promissory  note,  in  general  terms, 
if  upon  a  separate  paper,  is  not  itself  negotiable.  McLaren  v.  Wat- 
son, 26  Wend.  (N.  Y.)  430,  446,  affirming  19  Wend.  (N.  Y.)  557. 


2S  SURKTYSIIIP   AND    GUARANTY. 

C2)  This  nilt>  npjilics  hoili  wlicrt'  (lu>  jj;n;ir;inty  is  tundr  lo  a  <,MV(>n 
iiHlividiijil  hy  imiuc.  iiiul  wlicrc  no  j;iiarantoo  is  luiincd,  for  in  the 
latici-  case  ii  is  liniiicd  lo  the  lirsl  {ii'rson  >vh<>  thci-caftcr  lakes  the 
insiiuiuciii  ^uaiaiilird,  in  reliance  upon  the  ^uaraiiiv.  Id.;  Story, 
Tioni.  Notes.  J;  4.S4. 

i'A)  Where,  before  delivery,  a  fjenernl  fjnaranty  is  indorsed  upon 
ue^dliaMe  jtaper  by  one  not  a  |»arty  thereto,  and  naniin;j;  no  j^uaran- 
tee.  it  is  held  in  some  styles  that  it  docs  not  jiaitake  of  the  nej;o- 
tiability  of  the  paper  }2;uarantied.  Tinker  v.  McCanley,  'A  Mich.  ISS; 
True  V.  Fuller,  21  Pick.  (Mass.)  140;  Sandford  v.  Norton,  14  Vt. 
I'JS. 

Such  a  jiuaranty  becomes  fixed  whenever  any  one  lakes  it  n|)on 
the  guarantor's  credit.    Nevius  v.  Bank,  10  Mich.  'Al. 

r.ni.  A\her(>  a  note  is  <:;uarantied  in  general  terms,  there  is  a  pre- 
siini|iiion  that  the  ]ihiintitT  suinj^:  thereon,  appearing  to  be  the  first 
and  only  holder  for  value,  was  the  person  to  whom  the  guaranty  was 
<,Mven  or  duly  transferred.  Northumberland  Co.  Bank  v.  Eyer,  58 
Pa.  St.  103;  Cooper  v.  Dedrick,  22  Barb.  (N.  Y.)  olG;  Nevius  v. 
IJank.  10  :Mi(h.  547.  See  Taylor  v.  Binney,  7  Mass.  481;  True  v. 
Fuller.  21  IMck.  (Mass.)  142. 

If  the  guaranty,  though  on  a  separate  paper,  is  attached  to  the  in- 
strument guarantied,  the  effect  is  the  same  as  though  it  were  in- 
dorsed thereon.    Everson  v.  Gere,  122  N.  Y.  292,  25  N.  E.  402. 

In  other  states  it  is  held  that  a  general  guaranty  upon  the  back 
of  a  negotiable  instrument,  specifying  no  person  to  whom  the  guar- 
antor undertakes  to  l)e  liable,  runs  with  the  instrument  on  which 
it  is  written  and  to  which  it  refers,  ])artakes  of  its  character  of 
ncgoti;iliility,  and  any  jjerson  having  the  legal  interest  in  the  prin- 
ci|»al  instrument  takes  in  like  manner  the  incident  and  may  sue 
upon  the  guaranty.  Commercial  Bank  v.  Cheshire  l*rovident  Inst. 
(Kan.  Sup.)  53  Pac.  131;  Webster  v.  Cobb.  17  Til.  4(;0;  Partridge  v. 
Davis.  1^0  Vt.  400.  See  Watson  v.  McLjuvn,  10  Wend.  (X.  Y.)  557. 
i'ais.  Notes  &  B.  ji.  13l',  says  that  though  strong  opinions,  resting 
on  strong  aigunients,  have  Ixmmi  expressed  in  favor  of  tlie  doctrine 
ilial  the  neg(»t  iabilily  of  paper  guaianticd  alta<-hrs  (o  the  contract 
of  guaranty  which  is  indoisri!  upon  it,  Ihc  wci^^hl  of  aulhoiity  is  op 
posed  to  this  view. 

(h  Where  the  holder  of  a  negotiable  note,  in  Iransfeiring  it  to 
another,  indorses  and  signs  a  guaranty  thereon,  but  does  not  other 


IJAHILITY    OF    SlIRKTY    OH    (iUA  KAN'KJK.  2'.> 

wise  iiidoisc  the  note,  i(  lias  Imm-ii  licid  llial  llic  ;;iiaiaiity  docs  not 
iimic  to  t  1k'  1m  lie  111  of  an_\  luildcr  snl»s('(|ii<'iil  to  t  he  one  laUiii^i  IK  mi 
(he  ^uaraidoi',  so  as  to  oiiablc  him  (o  sxw  Die  laltcr  tlicr<'<»ii.  in  tin' 
absence  of  })i'oof  of  any  subse(]nent  ]>rivity.  Taylor  v.  r.inney.  7 
-Mass.  481.  See  Trust  Co.  v.  National  Bank,  101  U.  S.  70.  ('(intia, 
riulps  V.  Clmi-di,  Cm  :Micli.  'S.\'2,  :V2  N.  W.  :',();  Cooper  v.  Dediick, 
2'2  Jiarb.  (X.  Y.)  51(>;  I'artridjic  v.  Davis.  IM)  Vt.  4!M);  15enton  v. 
Fletcher,  SI  Vt.  418;  Jndson  v.  (Jookwin.  'M  111.  28(>.  But  the  imnu'- 
diate  liansferee  for  whose  benelit  the  ^naianty  is  given  may  sue 
npon  it.  Brown  v.  Curtiss,  2  N.  Y.  225.  And  see  Upham  v.  Prince, 
12  Mass.  14;  Barrett  v.  May,  2  Bailey  (S.  C.)  1. 

(5)  Pa.ssing  from  the  question  of  negotiability  to  that  of  assign- 
ability, the  ])rinciple  in  equity  is  that,  in  any  case  of  a  guaranty 
upon  or  aceonqianying  negotiable  pa])er,  the  holder  of  the  paper  may 
assign  his  right  with  the  pai)er  guarantied,  so  that  the  assignee  may 
sue  in  the  name  of  the  original  guarantee.  2  Daniel,  Neg.  Inst. 
1775;   Story,  Bills,  457. 

In  New  Y'ork  it  is  settled  that  a  special  guaranty,  limited  to  the 
person  to  whom  it  is  addressed,  and  contemplating  a  trust  or  re])os- 
ing  a  confidence  in  such  person,  is  not  assignable  until  a  cause  of 
action  has  arisen  thereon.  Evansville  Nat.  Bank  v.  Kaufmann,  03 
X.  Y.  273;  Bennett  v.  Draper,  1:5!)  N.  Y^  2GC,  34  N.  E.  791.  There- 
after, by  virtue  of  the  statute  relating  to  actions  by  the  real  party 
in  interest,  the  assignee  of  the  cause  of  action  may  now  sue  thereon 
in  his  own  name.    Evansville  Nat.  Bank  v.  Kaufmann,  93  N.  Y.  277. 

But  where,  as  in  the  case  of  a  guaranty  of  a  promissory  note  pre- 
viously executed  and  delivered,  the  amount  and  time  of  payment  of 
which  are  fixed,  the  guarantor  undertakes  to  i)ay  it  if  the  maker 
does  not,  it  makes  no  diffen'once  to  the  guaiantor  whether  he  pays  it 
to  the  payee,  or  to  some  one  else  to  whom  the  latter  transfers  his 
claim,  and  the  latter  may  sue  in  his  own  name.  P^verson  v.  Gere.  122 
N.  Y.  290,  25  N.  E.  492.  Compare  Lamourieux  v.  Hewit,  5  Wend. 
(N.  Y.)  307. 

The  fact  that  a  guaranty  is  in  terms  negotiable  makes  the 
guaranty  i)ass  with  the  instrument,  and  vests  whomsoever  may  hold 
the  note  with  right  to  sue  upon  it,  but  this  does  not  change  its 
character  of  a  guaianty  (Allen  v.  Rightmere,  20  Johns.  [N.  Y.]  365; 
Ketchell  v.  P,urns,  24  Wend.  [N.  Y.]  450.  Compare  Story,  Prom. 
Notes,  §  484;  Palmer  v.  Grant,  4  Conn.  389);  and  accordingly,  being 


30  SURETYSHIP    AM)    (il'AKANTY. 

;i  j,Mi;ii-;iiit  V.  llir  debtor  iiiiisi  srt-I;  llic  cnMlitor,  iiiid  tlie  <,ni;ir;ml()r 
is  mlillt'd  t(»  IK.  Holier  of  tlie  failure  of  the  iiiakei'  or  aeee]>t(ir  to 
l>av  the  iiistninieiit  (Allen  v.  Ki^htiiicrc.  lit)  Johns.  [X.  Y.]  lidH; 
\\  alion  \.  Maseall.  IM  Mees.  ^:  W.  T'Ji;  th(Mij;li  tliis  niav  he  varied  by 
the  pari  ieuhii'  terms  of  jiivcn  {guaranties  (Arents  v.  Com.,  IS  (Jrat. 
|\'a.)  7701. 

I'nder  tlu'  statutes  d(M'larin<2;  only  bills  and  notes  jo  be  n('}:;otiable. 
a  <;narantoi'  of  coiipons  on  railroad  bonds.  Ihon^li  the  jxnaranty  is 
available  as  such  to  a  transferee  of  the  prineipal  instruments,  may 
make  any  defense  that  he  could  have  made  if  sued  by  the  original 
jtayee  in  the  bonds.  Eastern  Townships  T.ank  v.  St.  Johnsbury  & 
L.  C.  R.  To.,  40  Fed.  423. 

W'oi'ds  of  assignment  on  the  back  of  inst  laiments.  unless  cleaT'ly 
showinfj  an  intention  to  exempt  the  transferror  from  an  indorser's  lia- 
l)ility,  are  treated  as  an  indorsement.  Sears  v.  Lantz,  47  Iowa,  G58; 
\  anzant  v.  Arnold,  31  Ga.  210;  Fassin  v.  Hubbard,  55  N.  Y.  405; 
Kiihards  v.  Frankum,  9  Car.  &  P.  221;  Shelby  v.  Judd,  24  Kan.  IGG; 
Hall  V.  Tobv,  110  Ta.  St.  318,  1  Atl.  3(;0. 

9.  EXTENT  OF  LIABILITY. 

The  liability  of  a  surety  or  f^uarantor  is  not  to  be  extended  beyond 
the  terms  of  his  contract,  properly  construed.  To  the  extent,  and  in 
the  mannei',  and  undei'  the  circumstances  prescribed  iu  his  oblipition, 
lie  is  bound,  but  no  further. 

Tie  has  a  rijiht  to  stand  upon  tln^  precise  terms  of  his  contiact.  And 
if  there  be  a  default,  or  breach  of  condition,  his  liability  must  be  de- 
temiined  by  the  tenns  of  the  contrac  t.  which  cannot  be  extended  by 
construction  or  implication  to  cover  a  case  not  within  its  j)rovisions. 
Cushin^r  V.  Cable,  48  Minn.  3,  50  N.  W.  S!)l  ;  Tern  Plow  &  Wheel  Co. 
V.  Ward,  1  Kan.  App.  0,  41  Pac.  <;4;  Miller  v.  Stewart,  0  Wheat.  081 ; 
Flynn  v.  Mudd,  27  111.  :'.2:'.;  Chase  v.  .Mcl>(.nald.  7  liar.  .V:  .1.  i.Md.)  100; 
Noyes  V.  Granj^cr.  51  Iowa,  227,  1  N.  W.  519;  Ludlow  v.  Simond,  2 
<  aines,  ("as.  (X.  Y.)  1  ;  F.  S.  v.  IJoecker,  21  Wall.  052. 

If  a  surety  is  sued  u|>on  the  ohl  agreement,  to  which  alone  his  under- 
takinj^  was  ao'cssory.  he  has  only  to  show  that  that  has  ceased  to 
<'\ist,  and  no  lon^^ei'  binds  his  jirincijial ;  ami,  if  he  is  sued  upon  the 
.substituted  agreement,  he  is  entitled,  both  in  law  and  <'<piity,  lo  make 


LIAHILITV    OK    SI'KKIY    Oli    (illA  K  AN'KMl.  Ml 

(he  short  and  conclusivo  ansvv<'r,  "Xoii  lia'c  in  fo'dcra  v<'iii."  Idf 
V.  Cliurcliill,  14  Ohio  St.  'M'2;  Maylicw  v.  P.oyd,  r.  M<1.  lOli;  W-Anm  v. 
(MicsiK y,  1  Staikie,  11)2;  IVni  Plow  He  Wlurl  Co.  v.  Ward,  1  Kan.  App. 
<>,  41  Tac.  G4;  Paiue  v.  Jones,  7(>  N.  V.  274;  Colnirn  v.  Wchh,  .^0  Ind. 

A  surety  for  an  official  lioldinfj;  ofllice  for  a  jx-riod  lixcc]  l)y  statute 
is  j;enerally  oidy  liable  foi'  that  pei'iod.  IJoaid  of  Adin'rs  v.  McKowen, 
48  La.  Ann.  2."il,  ID  Soutli.  :J28;  Uassell  v.  Lonj;,  2  Maule  &  S.  'M'/.i; 
•Mayor,  etc.,  of  Wilmington  v.  Horn,  2  Har.  (Del.)  190. 

But  see,  further,  as  to  the  question  of  liability  while  the  official  holds 
over  pending  the  appointment  of  a  successor,  Baker  City  v.  Murphy, 
:\0  Or.  4()r),  42  Pac.  13.'];  Eddy  v.  Kincaid,  28  Oi-.  H.'iT,  41  Pac.  150. 

Where  a  bond  given  by  a  surety  for  himself  and  his  administrators, 
to  secure  the  due  discharge  of  his  trust  by  a  bank  cashier,  was  condi- 
tional upon  such  performance  during  his  entire  emplo^-ment,  whether 
under  his  present  or  any  subsequent  election,  and  whether  under  the 
bank's  present  charter  or  any  renewals  or  extensions  thereof,  tin- 
surety  was  held  liable,  though  the  breach  of  duty  by  the  cashier  oc- 
<iurred  while  he  thereafter  held  office,  without  the  formal  re-election, 
as  required  by  statute.  Shackamaxon  Bank  v.  Yard,  143  Pa.  St.  12!), 
22  Atl.  908;  Id.,  150  Pa.  St.  351,  24  Atl.  635. 

But  a  bond  to  secure  the  faithful  performance  of  oflficial  duties  by 
a  third  person  in  a  specified  capacity  does  not  render  the  surety  liable 
for  his  default  in  the  duties  of  a  distinct  office  to  which  he  is  subse- 
quently appointed.  National  Mechanics'  Banking  Ass'n  v.  Conkliug, 
^)0  N.  Y.  120. 

The  sureties  of  a  city  clerk  are  not  responsible  for  his  misappropria- 
tion of  public  moneys  paid  to  him  which  should  have  been  paid  to  an- 
other official.  Orton  v.  City  of  Lincoln,  150  III.  499,  41  N.  E.  159; 
San  Luis  Obispo  Co.  v.  Farnum,  108  Cal.  562,  41  Pac.  445;  Lowe  v. 
City  of  Guthrie,  4  Old.  287,  44  Pac.  198.  Compare  Campbell  v.  Peo- 
ple, 154  III.  595,  39  N.  E.  578;  Spindler  v.  People,  154  III.  637,  39  N. 
E.  580. 

So,  the  sureties  of  an  otiicial  are  not  liable  for  his  misfeasance  occur- 
ring entirely  during  a  term  of  office  prior  to  that  covered  by  their 
bond  (Bogardus  v.  People,  52  III.  App.  179);  but  are  liable  for  his 
failure  to  account,  during  the  latter  term,  for  moneys  received  during 
the  prior  term  (U.  S.  v.  Dudley,  21  D.  C.  337),  as  well  as  for  his  mis- 


32  SURKTYSIIII'    AM)    (ilAKANTY. 

;i|iiir(>iiri;Ui(tn  of  fiiiuls  duiiim  llic  Icriii  cdMicd  1»\  tlic  ImmhI.  tlioii^Tr 
tllVclt'd  for  tlu'  purposr  of  coverinu  :i  (Icfalciilion  ((umiiillcil  diiriiiji- 
the  jirior  tonn  (IVoplo  v.  llaiimioiul,  lOI*  Cal.  :5S4,  4li  Pac.  'Mi);  and 
\hv  snivtifs  on  the  new  liond  of  an  olTu-ial  who  succeeds  liiniself  are 
lialil*'  for  his  iiiisa|iiir(i|ii  iaiioii  or  faihire  to  accoiiiit.  (hnin.u  tliat  lenii. 
for  funds  remaining-  in  his  liands  when  the  prior  term  eiid  d  (Trustee!* 
of  Schools  V,  ArnoUl,  HS  llh  App.  10:M. 

If  a  rej;ister  of  deeds.  (hnin<;-  the  term  for  wliicli  a  bond  has  been 
given  to  secure  tlie  faithful  performance  of  all  the  duties  of  his  ollice, 
is  l)_v  statute  subjected  to  liability  for  dama<;»'S  to  individuals  injured 
by  his  failure  to  index  instruments,  the  sureties  are  also  liable  (State 
V.  (Jrizzard,  117  N.  C.  105,  23  S.  E.  93);  and  sureties  on  an  ollicial 
bond  may  be  liable  for  various  torts  of  the  principal,  in  so  far 'as  they 
constitute  a  breach  of  his  otiicial  duty  (Kischer  v,  Meehan,  11  Ohio 
Cir.  Ct.  II.  103;  Stephenson  v.  Sinclair,  11  Tex.  Civ.  App.  133,  36  S.  W. 
137.      Compare  Marquis  v.  Willard,  12  Wash.  528,  11  Tac.  880). 

The  terms  of  an  official  bond  may  be  such  as  not  to  render  the  sure- 
ii»  s  liable  for  disbursements  erroneously  made  by  the  official,  if  actually 
made  in  good  faith  and  for  the  benefit  of  the  government.  U.  S.  v. 
.McClane,  74  Fed.  153. 

The  terms  of  a  given  contract  of  suretyship  or  guaranty  may 
be  such  as  to  cover  a  wider  field  than  the  usual  one.  Thus,  where 
a  bond  was  given  to  a  bank,  conditioned  upon  the  faithful  and 
honest  performance  by  the  cashier  of  all  his  duties  during  his  term 
of  office,  and  he  converted  funds  of  the  bank  to  his  own  use,  and 
♦■•ngaged  in  a  conspiracy  to  defraud  the  bank,  by  which  the  latter 
lost  funds  belonging  to  it,  it  was  held  that  the  fact  that  the  bank 
had  failed  to  pr(»vide  an  "exchange  committee,"  as  required  by  its 
by-laws,  and  that  in  the  absence  of  such  a  conuniltw  the  cashier 
had  exclusive  authority  to  transact  the  business  of  Ihe  bank,  would 
not  relieve  the  sureties,  nor  would  the  fact  lliat  his  salary  had  been 
increased  in  considerat  i(ui  of  his  peirormiiig  other  duties  n(tt  af- 
fecting the  continuance  of  his  full  duties  as  cashier,  if  the  losses  in 
(pU'Slion  occurred  because  of  his  ])reach  of  duty  as  cashier.  Wallace 
V.  IJank,  120  Ind.  2«;5.  2(;  X.  )•:.  175;  Sha(  Uamaxou  ItanU  v.  Vaid.  150 
I'a.  St.  351,  1^1  All.  <i:;5.  Conqiare  American  Tel.  Co.  v.  I^-nnig,  VW) 
Pa.  St.  51)  1,  21  All.  i(i2. 


I.IAHIMTY    01-'    HUUETY    OK    GUARANTOR. 


33 


And  a  surety  for  a  coiilfactoi-  is  not  disdiiirj^M'd  from  liability  al- 
though hisposilioM  lias  been  allered  by  the  corHliicI  of  Ihe  employer, 
where  that  conduct  lias  been  ranscd  by  a  fiaiidiilcnt  act  or  omission 
of  the  contractor,  against  which  the  surety  has,  by  the  contract  of 
suretyship,  guarantied  the  employer.  Mayor,  etc.,  of  Kings! on-ui)on- 
HuU  V.  Harding  [1S!)2]  2  Q.  B.  4!)4. 

As  to  the  liability  of  sureties  on  statutory  undertakings  to  secure  a 
stay  on  appeal,  see  Foo  Long  v.  Surety  Ck).,  14G  N.  Y.  251,  40  N.  E.  730. 

The  liability  of  a  guarantor  under  a  continuing  guaranty  remains 
in  operation,  in  resjiect  to  advances,  credits,  etc.,  made  during  the 
entire  period  covered  thereby,  if  any  time  limit  or  other  condition 
is  named,  either  expressly  or  by  implication,  or  otherwise,  until  revo- 
cation, in  cases  where  the  guaranty  may  be  revoked.  Burch  v.  De 
Rivera,  53  Hun,  3G7,  0  N.  Y.  Supp.  20G. 

Inasmuch  as  a  contract  of  suretyship  or  guaranty  may,  as  else- 
^^here  stated,  be  general  or  special,  assignable  or  nonassignable, 
negotiable  or  nonm^gotiable.  the  persons  in  favor  of  whom  a  given  ■ 
contract  may  operate^  are  ditTerent  in  these  different  classes  of  cases. 
The  surety  or  guarantor  may  restrict  his  obligation  to  specified 
l)ersons,  or  extend  it  to  any  person  wiiatever  who  may  act  upon  it. 
or  to  those  who  shall  first  act  upon  it,  or  to  any  person  in  a  specified 
class;  and  the  only  difficulty  in  given  cases  is  to  ascertain  what 
was  intended  ])y  thc^  terms  of  his  contract,  subject  to  certain  re- 
strictive princijiles  as  to  assignability  and  negotiability, — topics 
wiiich  are  considered  below.  Evansville  Nat.  Bank  v.  Kaufmann, 
m  N.  Y.  277,  270;  Lowry  v.  Adams,  22  Vt.  160;  Bobbins  v.  Bing- 
ham, 4  Johns.  (N.  Y.)  47G;  Union  Bank  v.  Coster,  3  N.  Y.  214. 

A  guaranty  may  be  given  to  s[)ecified  persons,  expressly  or  by 
implication  on  behalf  of  others;  and  in  such  a  case  the  former  may 
sue,  though  it  was  the  latter  who  made  advances  or  otherwise  in- 
curred obligations  or  liabilities  on  the  faith  of  the  guaranty.  Lloyd's 
V.  Harper,  16  Ch.  Div.  200. 

A  guaranty  to  secure  credit  is  terminated,  as  to  future  credits, 
b}'  the  insolvency  of  the  person  credited,  of  which  the  creditor  has 
notice.    Lennox  v.  Muri)hy  (^fass.)  50  N.  E.  644. 

If  a  guaranty  is  given  with  the  purpose  of  securing  a  partnership, 
the  fact  that  it  was  in  form  addressed  to  one  of  the  members,  under 
nhose  name  the  firm  did  business,  does  not  prevent  their  availing 
SUK.&  G.— 3 


34  SURKTVsmi'    AM)    Ul  AKANTY. 

tbomselvos  of  it  (Beakes  v.  I>a  ("nnli.i.  Ii'i;  X.  V.  'J:*:',.  I'T  X.  i:.  iMli: 
thouj^h  it  is  otherwise  where  the  ^MiaiMiiIor  docs  not  kiiuw  th:U  il 
is  a  lirm  that  i)ro|)()s«'s  to  icl.v  on  tlic  <::iiaiaiit_v,  and  ho  ])roi>osos  to 
iinaraiit.v  only  tlio  iiidixidnal  to  wlioiu  the  ;:;uai'an(_v  runs  (llanis  \. 
I'.anow.  lil  X.  V.  :!:i;  Lord  Arliui^loii  v.  .Mnrickr.  L'  Saiiiid.  Ill; 
Wri-ht  V.  Kussel,  2  W.  Bl.  JCU;  Myers  v.  Edge,  7  Toini  K.  i:r.4; 
lUdiiies  V.  Small.  157  >[ass.  223,  32  N.  E.  3). 

In  the  abs«'n(»'  of  lanj;ua{;e.  in  a  f^naranty  j^'ncii  !<»  a  liiin.  slKiwin;^ 
that  the  parties  intondcd  Iliat  il  slioiild  survive  changes  in  tlio  iiarlncr- 
ship.  and  inui-e  to  llio  benotii  of  a  now  linn,  as  well  as  tJie  old.  it 
torniinates  with  tlie  existence  of  the  linn  to  wliidi  it  was  given. 
Bennett  v.  Draper,  139  N.  Y.  270.  34  N.  E.  791;  Strange  v.  Lee,  :: 
East,  489;   Add.  Cent.  C*r^r>. 

But  loans  on  advances  made  by  the  old  firm  on  the  faith  of  the 
guaranty  could  be  assigned  to  the  new  tirm,  and  such  assignmeni 
would  carry  with  it  a  right  of  action  on  llie  gnaianty.  Bennett  v. 
Drai.ei-.  139  X.  Y.  270.  34  N.  E.  791. 

And  the  fact  that  a  guaranty  addressed  to  a  firm  is  a  contiiming 
one  does  not  operate  to  continue  it  after  the  membershii»  of  the 
firm  changes.    B.urch  v.  De  Kivera,  53  Hun.  3(;7.  (I  N.  Y.  Supp.  20(;. 


RIGHTS  OF  THE  SURETY  OR  GUARANTOR. 

10.  (a)  An  ago !)).■<(  tJy  principal.  After  the  debt  is  due,  and  llie 
surety  or  guai-antoi-  lias  paid  the  same,  his  right  of  action  arises  against 
the  principal  without  demand  for  what  he  has  thus  paid,  with  inter- 
est and  costs.  Collins  v.  Boyd.  14  Ala.  505;  Harper  v.  ^IcVeigb,  S2 
^'a.  7.51;  Tillotson  v.  Bose,  11  Mete.  (Mass.)  299;  Eaton  v.  Lambert. 
1  Neb.  339;  Ward  v.  Henry,  5  Conn.  .595;  Coggesliall  v.  Buggies,  02 
III.  101;  I{usliong  V.  Taylor.  82  Mo.  070;  Craumer  v.  ^bSwords.  2<; 
W.  \a.   tl7. 

The  surety  or  guarantor  may  also,  hy  special  agreement,  have  other 
means  of  indennufying  himself,  as  by  enforcing  securities  given  to  s*'- 
cure  him  against  loss  (West  v.  Hayes.  117  Ind.  290.  20  X.  E.  1.55); 
and  is  not  dchmi'ed  from  becoming  a  piiicliaser  at  slierilT's  sah'  of  (lie 
property  of  the  jirincipal  (.Malliis  v.  Stulllebeaiii.  91  111.  •1S7).  lie  may 
also  seek  the  aid  of  e<|uily  for  reimbursement.      liisjt.  Ecp  i;  .''.'{l. 

And  becau.se  the  surety  has  uo  interest  iu  the  contract  of  his  i)riu 


KIGHTS    OK    THK    SUKKTY    OK    GUAItANTOK.  35 

cipiil,  he  may,  in  a  pi-oi)or  case,  i)i"oci'e(J  in  a  courl  of  efinity  against  the 
[)rincipal  to  comf)el  him  to  pay  the  debt.  1  Story,  Eq.  Jur.  §  327; 
Bishop  V.  Day,  13  Vt.  81;  Harris  v.  Xcwcll,  42  Wis.  <;!>!;  Hays  v. 
Ward,  4  Jolins.  Ch.  (N.  Y.)  12:5. 

If  a  suit'ty  or  guarantor,  after  the  debt  has  become  due.  lias  any 
apprehension  of  loss  oi'  injury  fr(»ni  tlie  delay  of  the  creditor  to  en- 
force the  debt  against  the  principal  ilebtor,  he  may  {iroeeeil  in  equity 
to  compel  the  debtor  to  discharge  the  debt  or  other  obligation  for 
which  the  surety  is  responsible.  Story,  Eq.  Jur,  §  849 ;  Norton  v.  Reid, 
11  S.  C.  593;  Watson  v.  Barr,  37  S.  C.  463,  IG  S.  E.  188;  Philadelphia 
&  R.  R.  Co.  V.  Little,  41  N.  J.  Eq.  519,  7  Atl.  35G;  Gibbs  v.  Mennard, 
6  Paige  (N.  Y.)  258;  Hannay  v.  Pell,  3  E.  D.  Smith  (X.  Y.)  432. 

(b)  As  against  the  creditor.  A  surety,  if  compelled  to  pay  the  prin- 
cipal's debt,  is  entitled  to  stand  in  the  creditor's  place,  and  to  enforce 
the  same  remedies  and  avail  himself  of  all  securities  held  by  the  cred- 
itor. Hays  V.  Ward,  4  Johns.  Ch.  (N.  Y.)  130;  Kidd  v.  Hurley,  54 
N.  J.  Eq.  179,  33  Atl.  1057;  Schroeppell  v.  Shaw,  3  N.  Y.  457. 

At  law  the  surety  is  liable  to  pay  the  debt,  though  the  creditor  holds 
securities;  but  in  equity,  if  no  injury  would  result  to  the  creditor  and 
otherwise  might  result  to  the  surety,  the  latter  may  require  the  cred- 
itor to  first  resort  to  his  securities  before  coming  to  the  surety.  Kidd 
V.  Hurley,  54  N.  J.  Eq.  180,  33  Atl.  1057;  Irick  v.  Black,  17  N.  J.  Eq. 
195. 

But  subrogation  is  a  matter  of  grace,  not  of  right,  and  is  a  creature 
of  pure  equity.  It  will  never  be  decreed  where  it  works  injustice. 
Budd  V.  Olver,  148  Pa.  St.  194,  23  Atl.  1105;  Prairie  State  Nat.  Bank 
V.  U.  S.,  1G4  U.  S.  231,  17  Sup.  Ct.  142 ;  Gadsden  v.  Brown,  Speer,  Eq. 
(S.  C.)  41. 

As  a  general  proposition,  it  is  no  defense  to  an  action  against  a  sure- 
ty or  guarantor  that  the  creditor  has  other  securities,  and  the  defendant 
has  no  right  to  ask  an  assignment  thereof  to  himself  prior  to  his  pay- 
ment of  the  creditor's  demand.  Lumbennen's  Ins.  Co.  v.  Sprague,  59 
Minn.  208,  60  N.  W.  1101. 

A  guarantor  or  suret}',  when  sued  by  the  creditor,  cannot  avail  him- 
self, in  exoneration  of  his  liability,  of  a  cause  of  action  for  damages  for 
a  breach  of  the  contract  existing  in  favor  of  the  principal.  Newton 
V.  Lee,  139  N.  Y.  332,  336,  34  N.  E.  905. 

Conversely,  securities  belonging  to  the  principal  debtor,  and  pledged 


36  SI'UKTVSIIII'    AM)    (.I'AltANTY. 

l>_v  liiin  t»i  indcinnifv  liis  siiifiy,  iimrf  lo  ilic  Iti  nclU  of  tin'  crcdidn-. 
^lt•V(•l•s  V.  (';iiii|ili(  II.  .">:»  N.  .1.  L:i\v.  :'.7s.  :',:>  Ail.  7SS;  Kastmaii  v.  Foster, 
s  .Mete.  (Mass.i  l!i;  \{'hv  v.  Dewey,  i:{  (Jray  (Mass.)  47;  Hussell  v. 
I'larke,  7  Ciaiicli.  C.'.i:   Hvcrlson  v.  l?oolIi.  1!)  Johns.  (N.  Y.)  4S(;;   Keller 

v.  Ashfnii].  i::::  r.  s.  <;iiL\  lo  suj).  ct.  i!n. 

( iia\r  (l(»iiliis  were  I'oi'  a  time  entertiuiicil  as  to  (he  ri^:ht  of  a  surety, 
hy  suit  in  <M|niiy.  to  r('(]nirf  the  creditor  to  prost ciilc  his  dcniand  aj^aiust 
iln'  priiifipal.      W  liiiht  v.  Simpson,  (5  Ves.  714. 

r.ut  the  ri;;ht  is  now  recop;uizcd  in  appr<»priato  cases,  the  surety  be- 
inu  rtMpiired.  however,  to  indemnify  the  creditor  a}i;ainst  h)s»  by  a  fruit- 
less suit.  In  re  Babcoek,  :?  Story,  :^9:^,  Fed.  Cas.  No.  (')'.)(»;  Thomjison 
v.  Taylor.  72  N.  Y.  82;  Iluey  v.  Pinuey,  5  Minu.  310  (G\\.  24tij;  IriiU 
V.  I'.lack.  17  N.J.  Eq.  189. 

There  are  cases  where,  apart  from  this  rip;ht  in  equity,  the  surety  or 
{guarantor,  in  case  of  default  by  the  princii>al,  is  entitled  to  notify 
the  creditor  to  proceed  ajiainst  the  principal,  at  the  peril  of  otherwise 
releasing  the  surety  or  .miarantor  to  the  extent  of  any  injury  resnltinu 
from  The  failure  to  comjily.  This  is  the  view  a<lopted  in  sonie  jniisdic- 
tions  (King  v.  lialdwin,  17  Johns,  [N.  Y.]  884;  Pain  v.  Packard,  18 
Johns.  [N.  Y.l  174;  Remsen  v.  Beekman,  25  N.  Y.  552;  Colgrove  v. 
Tallman,  G7  N.  Y.  95;  Harriman  v.  Egbert,  8(1  Iowa,  270);  while  in 
others  the  right  is  denied  (Frye  v.  Barker,  4  Pick.  [Mass.]  382;  May 
V.  IJ.cd.  125  Ind.  199,  25  N.  E.  21G;  Thompson  v.  Bowne,  39  N.  J. 
Law,  :;:  Taylor  v.  Beck,  13  III.  37G). 

But  the  nature  of  the  given  contract  of  suretyship  or  guai-anty,  and 
its  terms,  and  other  siK'cial  circumstances,  may  vary  the  result  that 
would  otherwise  follow,      (jage  v.  Bank,  79  III.  G2. 

And,  even  where  the  general  right  of  the  surety  ov  guarantor  to  no- 
tify the  creditor  to  proceed  against  the  principal  is  upheld,  the  courts 
have  not  been  disposed  to  apply  this  doctrine,  except  where  the  surety 
lieiame  such  at  the  inception  of  the  contract,  or  that  relati(ui  was  cre- 
ated by  dealings  lieiween  the  parties  originall.\  ImiiiiuI  liy  the  contract, 
sul»s(  (pieiit  theieto,  of  which  the  cicditor  had  notice.  Newcomli  v. 
Hal<'.  90  N.  Y.  82t;;  Trimble  v.  Thorne,  K",  Johns.  (X.  Y.)  152;  Col 
grove  V.  Tallman.  (17  N.  Y.  95;    Ivemseii  v.  r.eekmaii.  25  \.  \'.  552. 

It  is  not  extended  to  engagements  which,  though  collateral  in  form, 
were  entered  into  for  the  k'neflt  of  the  surety  or  guarantor  subsequent 
to  the  original  transaction,  and  upon  a  new  and  independeul  eunsid- 


UKillTS    OK     I'lIK    SIKl/lV    OK    (ilA  H  A  NTOIJ.  37 

ciMtioii  (Wells  V.  Mmiiii.  4")  N.  Y.  .'{27);  nor  to  cascH  wlicrc  the  v<*ry 
piiipose  of  till'  j^uaraiity  is  to  avoid  the  noccssity  of  the  crcdilor's  re 
sorting  to  liis  ordinary  remedies  aj^ainsl  tlif  |>riii(i|ial  (Snow  v.  lJor;;an, 
18  R.  I.  289,  27  Atl.  :{:J8). 

Ddimiid  <n,(l  notice  of  dcfanlt.  A  surety,  in  the  strict  sense,  as  dis- 
tin^nisli«l  Iroiii  a  j^naiantor.  is  not.  as  a  {general  i»ro[)osition,  <intitled 
to  have  a  demand  made  on  llie  princiiial.  or  to  notice  of  liis  d<*fanlt ; 
bein^'  liimself  a  del»lor  from  the  be;:innin<i,  and  so  liable  to  see  that 
the  debt  is  jiaid.  IIiiI  llie  conlract  may  jirovide  othei-wise.  .McMillnn 
V.  Banlv,  :}2  Ind.  13;  I'age  v.  Machine  Co.,  12  Tex.  Civ.  Aj)]).  327,  31 
S.  W.  988;  Doughiss  v.  Reynolds,  7  Pet.  113;  Carr  v.  Card,  34  Mo. 
513;  Redtield  v.  llaight,  27  Conn.  37;  Watsou  v.  Barr,  37  S.  C.  4G3, 
16  S.  E.  188. 

And  the  same  principle  applies  to  a  guarantor  where  he  is  liable  im- 
mediately upon  default.      Carr  v.  Card,  31  Mo.  513. 

On  the  other  hand,  the  right  of  a  mere  guarantor,  in  the  absence 
of  si)ecial  circumstances  or  special  agreement,  to  have  demand  made 
on  the  i)rincipal,  or  to  receive  notice  of  default,  is  viewed  in  differ- 
ent lights  in  different  jurisdictions.  In  New  York,  a  guarantor  is 
not,  in  general,  entitled  to  notice  (Barhydt  v.  Ellis,  45  N.  Y.  110; 
Brown  v,  Curtiss,  2  N.  Y.  235);  and,  even  where  notice  is  in  terms 
required,  it  may  not  be  a  condition  precedent  (Barhydt  v.  Ellis.  45 
N.  Y.  Ill);  w'hile  in  other  states  a  mere  guarantor  is  generally  en- 
titled to  have  a  demand  made  upon  the  principal,  and  to  have  notice 
of  the  default.  Thus,  if  a  guaranty  is  given  to  secure  performance 
by  the  principal  upon  denumd,  such  a  demand  is  a  condition  pre- 
cedent to  his  liability.  Ewen  v.  Wilbor,  70  111.  App.  153;  Redtield 
V.  Haight,  27  Conn.  37;   Dole  v.  Young,  24  Pick.  (Mass.)  250. 

And«where  a  continuing  guaranty  is  given  to  secure  the  faithful 
performance  of  dut^'  by  an  otlicial  or  an  employ^,  and  is  in  its  nature 
revocable,  the  guarantor  is  entitled  to  notice  of  a  default  involving 
moral  turpitude,  so  that  he  may,  if  he  chooses,  terminate  his  fur- 
ther liability  (.F.tna  Ins.  Co.  v.  Fowler,  108  Mich.  557,  GO  N.  W.  470); 
but  is  not  entitled  to  have  the  employ^  discharged,  or  to  receive 
notice  in  case  of  a  mere  default  in  a  contract  obligation  Olanchester 
Fire  Assur.  Co.  v.  Redfield  [Minn.]  71  X.  W.  709;  T^ancashire  Ins. 
Co.  V.  Callahan,  G8  Minn.  277,  71  N.  W.  2G1). 

Other  illustrations  of  cases  where  notice  of  default  is  required  are 


3S  SUKETYSIIir    AM)    (il'AItANTY. 

wlit-rr  ilitTf  is  M  ^Mi;ii;iiilv.  in  <,M'm'r!il  (cniis.  of  a  note  payable  on 
(icUKUHl;  (»r  a  ;,Miaraiily.  lifforr  iiiMlinity.  of  ]»ayni('iil  acroi-din^'  1o 
I  he  tt-nus  of  ilic  note.  Oxford  Itank  v.  Hayncs.  S  Pick.  (.Mass.)  fj:?; 
\\liih»ii  \.  Mcars,  II  Mnr.  iMass.i  ."((;;!.  And.  even  wlii-rr  it  would 
n«>t  oilicrw  isr  br  lalltd  for,  notice  of  drfanll  may  be  s|M'cially  rc- 
ipiind  as  a  condiliim  |irccc(b'nl  to  the  liability  »»f  a  surety  or  ^;nar- 
ant(.r.  Waldlieini  v.  Sonnenst raid.  S  Misc.  Kip.  '_M!»,  28  N.  Y.  Suj>i>. 
r.SL';  Davis  v.  W.lls.  KM  I'.  S.  170;  I'.ailiydt  v.  Kllis.  b"  N.  Y.  11<». 
.\nd  if  notice  ef  default  would  result  in  no  beiielit  wliatever  to  llie 
guarantor,  as  where  the  principal  was  insolvent  when  the  guaranty 
w  as  ^iiven,  and  so  remained,  failure  to  ^^[ive  notice  is  no  defense  to  the 
^'uarantor.  Taussijjj  v.  Reid,  145  111.  4!)5,  82  N.  E.  Ob^;  (Jibbs  v.  Can 
non,  0  Serg.  &  R.  (Pa.)  198.  And  the  same  principle  has  been  applied 
where  the  principal  is  insolvent  at  the  maturity  of  the  debt  (Sulli- 
van v.  Field.  118  X.  C.  358,  24  S.  E,  73"));  and  to  eases  where,  fn.m 
the  circumstances,  the  guarantor  must  know  all  that  a  notice  would 
tell  him  (Cooper  v.  Page,  24  Me.  75;  Williams  v.  Granger,  4  Day 
[Conn.]  444;  Milroy  v.  Quinn,  GO  Ind.  411V  Under  this  head  fall 
many  cases  of  absolute  and  unconditional  giiai antics  of  j)aymenl. 
McDonald  v.  Fernald  (X.  U.)  38  Atl.  720. 

And.  in  general,  even  where  a  notice  is  requisite  under  a  continu- 
ing guaranty,  notice  of  the  amounts  due,  given  within  a  reasonable 
time  after  all  transactions  with  the  principal  are  closed,  is  suf!i 
cient.  and,  if  no  injury  results,  an  entire  omission  of  notice  is  im- 
material. Ferst  V.  P.lackwell,  39  Fla.  021,  22  South.  802;  Stevens  v. 
Gibson,  f)9  Vt.  142.  87  Atl.  244. 

Notice  of  default  may  be  waived.  Page  v.  ^rachine  Co.,  12  Tex. 
Civ.  Ai>p.  327.  34  S.  W.  08S. 

And  the  relation  of  the  sureti<'s  or  giiaiaiiltus  may  be  such  in 
regard  to  a  transaction  as  to  make  the  principal  their  agent  in  re- 
spect t(>  Ihe  default,  and  so  dis]»ense  with  notice,  -lungk  v.  Keed, 
12  rtah,  10<;,  42  Pac.  202. 

(c)  Ax  a(fainJif  co-surt'th'fi  mid  eo-fin(ii'<n)f(>i's.  ( )ne  of  several  sure- 
ties (W  guarantors  wli(»  is  (»lili;_'e(l  t<i  and  does  jiay  the  credilur 
is  thereupon  entitled  to  conirilnilidii  fiom  the  others.  I^insilale 
V.  Cox,  7  T.  \\.  Mon.  (Ky.i  MM;  Woodworth  v.  Howes.  5  Tnd. 
27<).  And  the  mere  fact  that  they  were  bound  by  ditbrent  in 
HtrumentH    is    innuaterial    (Decring    v.  llarl    of    \Vin(  helsea,    2    Pos. 


liKiiri'S    OK    TlIK    sntKTY    OK    fiC  AUA  NTOU.  3') 

«&  r.  270;  IJosciiliaiiiii  v.  <  inddninii,  7s  \';i.  121);  ;is  is  ;ils(>  tlic  fact 
that  the  oiu'  who  pays  (iid  not  llicii  know  that  there  weri'  co  siirelies 
(Waiiicr  V.  Morrison,  .'{  Allen  [Mass.)  ."(iO).  And,  as  between  two  or 
more  sureties,  one  who  pa.vs  is  enlitlcd  to  (he  benefit  of  seciiritieH  held 
by  another.  Silvey  v.  Dowrll.  :,;:  111.  iMiO;  A;,micw  v.  I:.II.  I  Watts 
(Pa.)  31;   Currier  v.  Fellows,  27  N.  II.  ;}(iG. 

But  contribution  dc»es  not  rest  upon  contract,  but  on  the  broad, 
equitable  princii)le  that  equality  is  ecjuity.  .lust ice  and  fair  dealing 
demand  that  where  two  or  more  parties  sign  tlie  same  obligation, 
and  become  obligated  in  precisely  the  same  degree  thereby,  and 
stand  ujioii  the  same  footing  as  to  their  liabilities  thereunder,  on(; 
of  the  number  shall  not  be  conipelled  to  assume  the  whole  burden 
for  his  associates,  but  may  compel  them  to  share  equally  with  him 
any  loss  that  may  occur  as  the  result  of  their  common  liability, 
IJulkeley  v.  House,  G2  Conn.  459,  20  Atl.  352. 

Parol  evidence  is  therefore  admissible  to  show  that  apparent  prin- 
cipals are  sureties,  or  vice  versa.  Kobison  v.  Lyle,  10  Barb.  (S. 
y.)  512;  Barry  v.  Ransom,  12  N.  Y.  402;  Apgar's  Adm'rs  v.  Ililer,  24 
X.  J.  Law,  815;  Mansfield  v.  Edwards,  130  Mass.  15. 

"If  the  sureties  are  not  bound  for  the  same  thing,  or  do  not  oc- 
cupy towards  each  other  the  same  relative  position,  then  one  of 
these  results  may  follow:  (1)  The  surety  paying  the  debt  may  have 
no  right  to  contribution;  (2)  a  surety  first  in  point  of  time  may 
have  no  remedy  against  one  who  is  subsequent;  (3)  or  a  subsequent 
surety  may  have  no  remedy  against  the  first."  Bulkeley  v.  House, 
02  Conn.  459,  20  Atl.  352;  Bisp.  Eq.  308;  Harris  v.  \Yarner,  13  Wend. 
(N.  Y.)  402;  Paul  v.  Berry,  78  111.  158;  Sayles  v.  Sims,  73  N.  Y.  552; 
Oldham  v.  Broom,  28  Ohio  St.  53;  Sherman  v.  Black,  49  Vt.  198. 

Thus,  if  one  signs  as  surety  for  one  who  is  himself  a  surety,  he  is 
not  liable  for  contribution  to  the  latter.  Robertson  v.  Deatherage, 
82111.511. 

And  if  a  note  signed  by  a  jyrincipal  and  two  sureties  is  discharged 
by  the  execution  and  delivery  of  a  new  note  executed  by  the  prin- 
cipal and  one  of  those  sureties,  and  the  latter  is  forced  to  pay  the  last 
note,  he  is  not  entitled  to  contribution  from  his  co-suret}'  on  the 
first  note.  Chn]»man  v.  Garber,  40  Neb.  10,  04  X.  W.  302;  Bell  v. 
Boyd,  70  Tex.  133,  13  S.  W.  232. 


40  SUHKTYSHII'    AM)    C.rAPvANTY. 

^^'llil("  a  mere  volmilaiy  i.avniciil  l>,v  a  snrctv  oi-  guarantor,  wliicli 
could  not  have  Ihh'U  coniiK'llcd,  gives  liini  no  right  to  reimburse- 
ment from  the  jirincipal  nor  to  eonli  il»ution  from  co-sureties  or  co- 
guarantors  (Sui>i)iger  v.  (larrels.  '_*(»  111.  Ap|i.  Cl".*:  Hough  v.  In- 
surance (\>..  ')7  HI.  :ns;  Bradley  v.  liurwell,  :'.  Denio  [N.  Y.]  C.iH, 
yet  it  is  not  necessary  for  him,  in  oi-der  to  recover,  to  show  that  he 
was  comjK'lled  to  pay  by  execution.  >\lien  the  principal  ((Uitiad 
has  hrvu  broken,  lie  nuiy  pay  without  suit,  and  recover  tiie  anuiunt 
of  his  principal  (Mauri  v.  llcll'ernan,  L'i  .Johns.  [X.  Y.]  HS);  and  by 
analogy  is  entitled  to  contribution  (Bradley  v.  Burwell.  :{  Denio  [X. 

Y.]  «;i)). 

I)(>if/(  of  co-suretr/.  AVhile.  as  above  stated,  the  rifrht  to  contri- 
bution originated  in  equitable  principles,  yet  it  has  been  grafted 
upon  the  law,  with  the  aid  of  an  implied  promise  to  secure  the 
legal  remedy.  It  follows,  therefore,  that  the  death  of  one  of  two  or 
more  sureties  or  guarantors  does  not  relieve  his  estate  from  the 
liability  to  contribute  under  their  implied  contiact  to  that  effect, 
originating  when  they  executed  the  original  undertaking  (Johnson 
V.  Harvey,  84  N.  Y^  365);  even  though  the  default  by  the  principal 
was  subsequent  to  the  death  of  the  co-surety  (Bradley  v.  r.urwell, 
3  Denio  [X.  Y.]  Gl). 

In  this  respect  the  mutual  obligation  to  contribute  is  like  any 
other  contract  made  by  one  in  his  lifetime  to  jiay  money  at  a  future 
time,  either  absolutely  or  contingently,  who  dies  before  the  occur- 
rence of  any  breach  of  the  contract.  Bradley  v.  Burwell.  3  Denio 
(X.  Y.)  GO;  Toussaint  v.  :Nbwtinnant,  2  Terra  R.  104;  Cowell  v.  Ed- 
wards, 2  Bos.  &  P.  2G8;  Wood  v.  Leland,  1  Mete.  (Mass.)  387;  Bach- 
elder  v.  Fiske,  17  :Mass.  4G4. 

The  theoiT  that  the  liability  of  the  sureties  or  gnaiantors,  as 
l)etween  tlieinselves,  rests  on  an  implied  contract,  is  not  univ<'rsally 
recognized,  and,  accordingly,  in  some  jurisdi(  lions,  the  death  of  one 
relieves  his  estate  from  the  duty  of  contribution.  Waters  v.  Biley. 
2  liar.  &  G.  (Md.)  305. 

Even  under  the  Xew  York  rule,  the  death  of  one  of  two  or  more 
co-sureties  or  co-guaiant(M's,  who  are  jointly  bound,  relieves  his 
estate  from  direct  liability  to  the  creditor.  Kisley  v.  Brown,  G7  X. 
Y.  IGO;  W\)od  v.  Fisk,  G:{  X.  Y.  245;  Getty  v.  P.insse,  41)  X.  Y.  385; 
IMckersgill  v.  Dihens,  15  W  all.  1  tO. 


DISCHAKUIC    OF    SURETY    OK    GUARANTOR.  41 

DISCHARGE  OF  SURETY  OR  GUARANTOR. 

11.  The  surety  or  guarantor  uiay  be  able,  in  given  cases,  to  set 
up  any  one  of  Humorous  dcfcusos  to  an  a<-ti(>n  against  him  by  the 
creditor  on  the  ground  that  liis  original  conlract  was  not  binding 
ab  initio,  or  that  by  some  subsequent  alteration  in  it,  or  in  the 
principal  contract,  or  some  subsequent  acts  of  the  creditor  injurious 
to  his  rights,  or  some  change  in  circumstances,  he  is  discharged. 
Thus: 

(a)  Fraud.  If  the  creditor  knows  that  the  surety  or  guarantor 
was  induced  to  become  such  by  fraudulent  representations,  he  can- 
not hold  him  to  his  contract.  lieath  v.  Chapoton  (Mich.)  73  N.  W. 
SOG. 

But  he  is  not  responsible  for  any  deception  practiced  by  the  prin- 
cipal upon  the  guarantor,  without  the  creditor's  knowledge.  Pow- 
€rs  V.  Clarke,  127  N.  Y.  422,  28  N.  E.  402;  Western  New  York  Life 
Ins.  Co.  V.  Clinton,  66  N.  Y.  326. 

(b)  Concealment.  If  the  creditor  misleads  the  surety  or  guarantor 
at  the  time  of  the  latter's  executing  his  contract,  or  suppresses 
facts  he  should  have  disclosed,  or  refuses  to  answer  proper  inquiries, 
which  would  have  revealed  facts  the  surety  or  guarantor  had  a  right 
to  know,  he  cannot  hold  the  latter  liable.  Benton  Co.  Sav.  Bank  v. 
Boddicker  (Iowa)  75  N.  W.  632;  Bellevue  Building  &  Loan  Ass'n  v. 
Jeckel  (Ky.)  46  S.  W.  482;  Denton  v.  Butler,  99  Ga.  264,  25  S.  E.  624; 
Fassnacht  v.  Gagin  Co.,  18  Ind.  App.  80,  46  N.  E.  45,  47  N.  E.  480; 
Traders'  Ins.  Co.  v.  Berber,  67  Minn.  106,  69  N.  W.  701;  Powers 
Dry-Goods  Co.  v.  Harlin,  68  Minn.  193,  71  X.  W.  16;  Jungk  v.  Hol- 
brook,  15  Utah,  198,  49  Pae.  305. 

But,  if  no  inquiry  be  made,  mere  silence  does  not  necessarily  re- 
lease the  surety.    Lake  v.  Thomas,  84  Md.  608,  36  Atl.  437. 

The  creditor  is  not  required  to  make  any  disclosure  or  explana- 
tion the  withholding  of  which  would  not  amount  to  fraud.  Powers 
V.  Clarke,  127  N.  Y.  423,  28  N.  E.  402. 

(c)  Invalidity  of  principal  debt.  Usually,  if  the  principal  debt 
is  not  bound  by  the  principal  contract,  the  surety  is  not  bound  by 
his  contract  of  suretyship.  But  this  principle  does  not  apply  where 
the  nonliability  of  the  principal  is  occasioned  by  a  purely  personal 


•12  SUKETYSlIir    AM)    urAKANTY. 

»lff»  iis(\  in  the  nature  <tf  a  ]»ii\ih'^(^  or  pintcction,  as  infancy  or 
(.oviTturc.  In  surl»  cast's,  the  snrcty  is  no(  iflcaHcd,  Inil  the  contract 
subsists,  as  to  him,  in  full  force.  The  existence  or  possibility  of  the 
disability  may  have  been  the  very  reason  why  a  surety  was  re- 
iliiii-ed.    Kyjjfcr  v.  Sijie.  S!>  \'a.  r)l(),  IG  S.  E.  ('>'2~. 

AN'lien  the  name  of  the  i)rincij>al  or  a  surety  lias  been  forced,  a 
((»  surety,  though  he  signed  in  the  belief  that  the  forged  name  was 
genuine,  is  nevertheless  bound  if  the  cre<litor  accepted  the  instru- 
ment without  notice  of  llie  forgery.  Helms  v.  AgricuUui-e  Co.,  l'.\ 
Ind.  ;iLM);  Veazie  v.  Willis,  6  Gray,  90;  Franklin  r.ank  v.  Stevens, 
39  Me.  532. 

The  holder  of  a  note  may  recover  against  one  guaraniying  jiromjit 
l)ayment  at  maturity,  though  the  note  is  void  as  against  the  maker, 
if  purchased  on  the  faith  of  such  guaranty.  ITolm  v.  Jamieson,  173 
111.  I'll.".  ."iO  X.  E.  702. 

r.ut,  where  a  note  is  usurious  and  void,  the  guaranty,  if  depending 
solely  upon  the  same  consideration,  and  not  an  independent  contract, 
is  also  void.  Heidenheimer  v.  Mayer,  42  N.  Y.  Super.  Ct.  HIO;  Rosa 
V.  Butterfield,  33  X.  Y.  005. 

If  usury  in  a  note  makes  a  waiver  therein — as.  for  example,  of  a 
homestead  right — absolutely  void,  the  surety  signing  in  ignorance  of 
the  usury  is  not  bound.  I'rather  v.  Smith,  101  Ga.  283,  28  S.  E.  857: 
Eagle  Roller-Mill  Co.  v.  Dillmau,  07  Minn.  232,  09  N.  W.  910;  Allen 
V.  Wilkerson,  99  Ga.  139,  25  S.  E.  20. 

But  statutes  providing  that  a  corporation  shall  not  set  up  the  de- 
fense of  usury  render  such  defense  also  unavailable  to  individual  sure- 
ties and  guarantors.  Rosa  v.  Butterfield,  33  N.  Y.  605;  Stewart  v. 
nramhall.  74  X.  Y.  85.  Compare  Merchants'  Exchange  Xat.  Bank  v. 
(Jommercial  Warehouse  Co.,  49  X.  Y.  035. 

If  a  bond  is  not  merely  a  contract  betwfH'ii  the  parties  thereto,  but 
is  also  pail  and  iiai<-el  of  a  judicial  jiroceeding.  as  in  the  case  <»f  a  bond 
to  jii-ocure  an  adjournment  of  a  bastardy  proceeding,  it  is  void  uidess 
the  ollicer  who  retjuired  the  party  to  give  it,  as  a  condition  of  the  ad 
journment,  had  jurisdiction  of  the  ])erson  and  of  the  case,  and  the 
sureties  are  not  bound.  People  v.  lliggins,  151  X'.  Y.  577,  45  X'.  E. 
1033. 

(d)   Any  clian^ie  in    the  |iiin(i|tal  contract,  unless  obviously  unsub 
slant ial   (jr  certainly    nonprejudicial,   discliar;.ies    (he   surety,    if   made 


DISCHAHGK    OF    SUKKTY    Oli    GUAItAN'KJH. 


■i:i 


williout  his  consent,  oven  tli()ii;j;li  it  niiuht  prove  Itcnclicinl  to  liini. 
Pniiiie  State  Nat.  Bank  v.  U.  S.,  U'A  U.  S.  237,  17  Sup.  Ct.  142;  Holme 
V.  linniskill,  3  Q.  B.  Div.  4!>.-),  50.1;  Polak  v.  Everett,  1  Q.  B.  Div.  VM); 
Ellesniere  Brewery  Co.  v.  Cooper  [180G]  1  Q.  B.  75;  KeeKe  v.  U.  S.,  9 
Wall.  21  ;  I'iiiney  v.  Condon,  8G  Dl.  78;  Paine  v.  Jones,  70  N.  Y.  278, 
279;  Pajj;e  v.  Krekey,  137  N.  Y.  313,  33  N.  E.  311;  Bennett  v.  Draper, 
139  N.  Y.  2GG,  34  K.  E.  791 ;  VillajiC  of  Chester  v.  Leonard,  G8  Conn. 
509,  37  Atl.  397;  Board  of  Com'rs  of  Morgan  Co.  v.  Branham,  57  Fed. 
179;  United  States  Glass  Co.  v.  ^^'est  Virginia  Flint  Bottle  Co.,  81 
Fed.  993.     Compare  :Mersman  v.  Werges,  112  U.  S.  139,  5  Sup.  Ct.  65. 

Thus,  if,  after  a  promissory  note  payable  to  a  named  payee  or  bearer 
is  signed  by  one  as  surety,  the  principal  so  alters  it  as  to  increase  the 
rate  of  interest,  the  note  is  thereby  rendered  void  as  to  the  surety,  even 
in  the  hands  of  a  bona  fide  holder  for  value  without  notice.  Hill  v. 
O'Neill,  101  Ga.  832,  28  S.  E.  996;  Derr  v.  Keaough,  96  Iowa,  397,  65 
N.  W.  339;  Farmers'  &  Merchants'  Nat.  Bank  v.  Novich,  89  Tex.  381, 
34  S.  W.  914;  Windle  v.  Williams,  18  Ind.  App.  158,  47  N.  E.  680. 
Compare  Keene's  Adm'r  v.  Miller  (Ky.)  45  S.  W.  1041. 

But  it  is  usually  held  that  there  may  be  changes  so  immaterial  as 
not  to  effect  a  discharge.  Etz  v.  Place,  81  Hun,  206,  30  N.  Y.  Supp. 
765;  Troy  City  Bank  v.  Lauman,  19  N.  Y.  477.  And,  if  the  agreement 
for  a  change  is  void,  it  does  not  effect  a  discharge.  Slaughter  v.  Moore 
\T€X.  Civ.  App.)  42  S.  W.  372.  And  a  change  of  part  of  a  guarantied 
account  into  the  form  of  notes  does  not  discharge  the  guarantor  (Len- 
nox V.  Murphy  [Mass.]  50  N.  E.  644),  nor  does  a  change  in  the  nature 
or  extend  of  the  acts  guarantied,  as  compared  with  those  performed 
in  the  same  line  of  business,  employment,  or  credit  before  the  contract 
of  suretyship  or  guaranty  was  executed,  if  the  new  class  of  acts  is  in 
fact  covered  by  the  terms  of  the  latter  contract  (People  v.  Backus,  117 
N.  Y.  196,  22  N.  E.  759).  And  the  same  result  follows  where,  after  a 
bond  has  been  executed  by  sureties  or  guarantors  to  secure  the  agree- 
ment of  a  national  bank  as  a  depository  of  state  funds,  the  charter  ex- 
pires, but  is  extended  under  a  federal  statute  declaring  that  in  case  of 
such  extension  the  bank  shall  continue  to  be  in  all  respects  the  identical 
association  it  was  before  the  extension.  People  v.  Backus,  117  N. 
Y.  196,  22  N.  E.  759;  Exeter  Bank  v.  Rogers,  7  N.  H.  21.  Compare 
Thompson  v.  Young,  2  Ohio,  334;    Union  Bank  v.  Kidgely,  1  Har,  & 


n  SlliKTYSllir    AND    ClAKANTY. 

(J.  .".i!!;    I'.;ink  v.  Uaiiiii^toii,  -  I'cii.  ^:  \V.  127;    r.rown  v.  T/inimoic  17 

A  lidiul  fof  fiiitliful  MM'vice  may  bo  so  woi-dcd  as  to  survive  various 
clianut'S  tliat  would  otliorwise  discharge.  Singer  Mfg.  Co.  v.  Reynolds. 
ICS  Mass.  nss,  47  X.  K.  438. 

Illustrations  of  eases  where  a  change  in  the  I'elation.  situation, 
status,  etc.,  of  the  i)arties,  or  in  the  eircuinstanees,  does  operate  to  re- 
lease the  surety  or  guarantor,  or  to  throw  given  defaults  outside  the 
range  of  his  liahility,  are  stated  undei'  the  head  of  "Extent  of  Lia- 
bility." 

(e)  And  where  the  pirty  secured  does  some  act  which  changes  the 
]»osition  of  the  surety  to  his  injury  or  prejudice,  the  latter  is  discharged 
absolutely  or  pro  tanto,  according  to  the  circumstances.  Smith  v. 
MoUeson,  148  X.  Y.  247,  42  N.  E.  mi);  General  Steam  Nav.  Co.  v. 
Kolt.  G  C.  B.  (N.  S.)  550;  Calvert  v.  Dock  Co.,  2  Keen,  G.S8;  Warre 
v.  Calvert,  7  Adol.  &  El.  143;  Plunkett  v.  Machine  Co.,  84  Md.  520, 
3(;  Atl.  115. 

^lere  delay  by  the  creditor  in  suing  the  principal,  or  in  proceeding 
against  a  fund  pledged  by  him,  does  not  release  the  sui-ety  or  guarantor, 
even  though  loss  may  have  thereby  resulted.  Purdy  v.  Forstall,  4.") 
La.  Ann.  814,  13  South.  95;  Schroeppell  v.  Shaw,  :\  X.  Y.  440;  Evans 
v.  Evans,  IG  Ala.  465;  Darby  v.  Bank,  97  Ala.  (545,  11  South.  881; 
A\'atson  v.  Barr  (S.  C.)  10  S.  E.  188. 

And  mere  postponement  of  one  of  the  ordinary  proceedings  in  a 
<ase  in  which  an  undertaking  has  been  given  does  not  release  the  sure 
ties.      Steinbock  v.  Evans,  122  N.  Y.  550,  25  X.  E.  !)29. 

This  rule,  of  course,  yields  where  the  duty  to  proceed  with  diligence  to 
collect  of  the  principal  is  imposed  by  the  contract,  as  in  the  case  of  a 
guaranty  of  collection  (Northern  Ins.  Co.  v.  Wright.  7G  N.  Y.  445i; 
tlntugh  even  in  such  cases,  if  indulgence  by  the  creditors  to  the  prin 
cilial.  in  not  enforcing  the  debt,  is  with  the  acquiescence  of  the  guar- 
antor, the  latter  thereby  waives  his  strict  right  (Mead  v.  Parker.  Ill 
X.  V.  204,  18  X.  E.  727;  Woodcock  V.  Railway  Co.,  21  l>iw  ^:  E.]. 
Kcji.  2S5;  Cunmiings  v.  .\niold,  :;  Mete.  [.Mass.J  ISO;  Adams  v.  Way, 
:'.2  ("oiin.  lOdj;  and.  win  re  laches  of  the  creditor  is  siicli  as  to  discharge 
the  surety  or  guarantor,  it  thus  operates  only  to  the  extt-iit  that  the 
latter  has  sulTered  loss  ((iillighan  v.  Boardman,  29  Me.  79j. 


DISUIAHUK    OF    SUUKTY    OK    CiUAUANTOK. 


45 


One  who  guaranties  a  boIc  liadcr  lor  IIk-  tniiliriil  i.ciroriiianco  of 
duty  by  a  cloik  is  no  longer  responsible  if  the  trader  takes  a  i)artner 
(Wright  V.  Kussell,  :{  Wils.  5:U);  Holmes  v.  Small,  157  Mass.  223,  32 
N.  E.  3;  Lloyd  v.  Blackburn,  1)  Mees.  &  W.  3G3),  unless  the  contract 
otherwise  provides  (Garret  1  v.  Ilandley,  4  Barn.  &  C.  G66). 

But  the  mere  fact  that  a  government,  having  a  judgment  against 
a  principal  debtor,  releases  him  by  a  statute  from  imprisonment 
thereunder,  does  not  discharge  the  surety.  Hunter  v.  U.  S.,  5  Pet. 
1 73. 

The  duty  of  the  creditor,  in  respect  of  securities  held  by  him, 
towards  the  surely,  is  not  active,  but  negative,  and  he  is  simply 
bound  not  to  cancel,  waste,  or  impair  them.  If  securities  are  re- 
leased by  the  creditor,  they  must  possess  more  than  a  supposititious 
or  imaginary  value,  in  order  to  discharge  the  surety,  and  so  with  a 
bona  fide  exchange  of  securities.  State  Bank  of  Lock  Haven  v. 
Smith,  155  N.  Y.  200,  49  N.  E.  680;  Xeff's  Appeal,  9  Watts  &  S. 
(Pa.)  36;  Coates  v.  Coates.  33  Beav.  249;  Thomas  v.  Cleveland,  33 
Mo.  126;  Moss  v.  Pettingill,  3  Minn.  217  (Gil.  145). 

But,  if  security  held  by  a  creditor  is  lost  through  his  negligence, 
or  voluntarily  released,  without  the  surety's  consent,  the  surety 
is  pro  tanto  discharged.  Mingus  v.  Daugherty,  87  Iowa,  56,  54  N.  W. 
66;  Sherraden  v.  Parker,  24  Iowa,  28;  Burr  v.  Boyer,  2  Neb.  265. 

(f)  A  binding  extension  of  the  time  of  paAinent  of  the  principal 
debt,  without  consent  of  the  guarantor,  discharges  him,  unless  he 
subsequently  assents  to  the  extension  and  ratifies  it.  Bishop  v. 
Eaton,  161  Mass.  501.  37  N.  E.  665;  Chace  v.  Brooks,  5  Gush.  (Mass.) 
43;  Calvo  v.  Davies,  73  N.  Y.  211. 

(g)  The  full  payment  or  performance  of  the  debt,  act,  or  obligation 
of  suretyship  or  guaranty  operates  to  discharge  the  surety  or  guar- 
antor. Thus,  such  liability  ipso  facto  terminates  when  the  debt 
secured  is  paid  or  payment  is  tendered  (Petefish  v.  Watkins.  124  111. 
384,  16  X.  E.  248;  Woodman  v.  Mooring,  14  N.  C.  237;  Felch  v. 
Lee,  15  Wis.  265;  Sharp  v.  Miller,  57  Cal.  415;  Joslyn  v.  Eastman, 
46  Vt.  258;  Sears  v.  Van  Dusen,  25  Mich.  351;  Johnson  v.  Mills. 
10  Gush.  [Mass.]  503);  but  contra  as  to  tender  (Glark  v.  Sickler,  64 
X.  Y.  231). 

A  contract  of  suretyship,  entered  into  on  behalf  of  a  partnershi]» 
as  principal,  continues  no  longer  than  the  partnership  itself.  Lon- 
don &  L.  Fire  Ins.  Co.  v.  Holt  (S.  D.)  72  X.  W.  403. 


-iG  8URKTV>llir    AMI    lilAKANTY. 

r»ut  a  lliiu  may  l»y  iis  roiiduci.  after  a  cliaii^ir  in  its  iiu'iiib"  rsliip. 
rat  ify.  and  ilins  liind  itself  l»y.  a  let  in-  of  ci-rdit  {,'ivi'n  by  tlie  old  lirni. 
Sniiih  V.  L<'dyard.  1!)  Ala.  I'TH. 

ilii  Tlio  siiri'ly  or  guarantor  may.  of  course,  be  disthar;,'ed  by  any 
act  wiiicli,  by  tlio  terms  of  theii-  a;;r«»<'inont,  is  accordcil  that  elTect, 
as  liy  levocation  in  accoi'dance  ^vitll  an  express  reserved  ripht  to 
re\»die.  So.  also,  by  a  bindin;:  nnitnal  substitution  of  a  new  a^jrcM*- 
ment  in  jilace  of  the  old.    Tayloi-  v.  Hilary,  1  fYomp.,  M.  ^:  K.  711. 

(i)  DfOth  of  tiuiyftj  or  (jnavnntnr.     The   general    ])re>umpti()n,    i'> 
the  ab.^ence  of  express  \\t)ids.  that   the  parties  to  a  c(Mitratt   intend 
to   bind   not   only   tliemsehcs.   but    their   personal    representatives, 
apjdies  to  contracts  of  suretyship  or  <;uaranty.     The  parties  may. 
if  they  choose,  contract  otherwise.    And  tlu»  nature  of  the  contract 
may  be  conclusive  in  determining  tin-  intent.     In  the  case  of  a  con 
tinuinjr  jruaranty  of  successive  credits,  the  death  of  the  j^tiarantor. 
ami  notice  thereof,  terminates  the  <;uaranty  as  to  subsequent  cred 
its.  unless  the  contran   provides  otherwise.     Coulthart  v.  Clement 
S(Ui,  n  Q.  B.  Div.  42;    llarriss  v.   Tawcett.  L.  K.    1."   Kq.  Cas.  .Ml; 
TJoyds  V.  llariK'r,  It;  Ch.  Div.  1".M). 

r.ut.  if  the  «;tiaranty  creates  a  continuinjr  i)ecuiiiary  oblij;ation. 
the  consideration  for  which  is  entire  and  j.Mven  ome  for  all.  tln' 
•  leath  of  the  j,Miaiantor  dues  not  terminate  the  ;^uaranty,  unless  so 
provided.  Kernochan  v.  Murray,  111  N.  Y.  ?M\.  IS  N.  E.  StiS;  Holt 
liausen  V.  Kells.  IS  Ajip.  Div.  80,  45  N.  V.  Sujip.  171.  al1irme<l  l."l 
\.  Y.  770,  49  N.  E.  101)8;  Hecht  v.  Weaver,  :i4  Fed.  HI;  (Jreen  v. 
Younjr.  8  r.n'enl.  fMe.l  14;  Shackamaxon  Bank  v.  Yard.  I  1:5  Pa.  Kt. 
1L'!».  L'L'  Atl.  !I08;  Id.,  150  Pa.  St.  H.^l.  L'4  Atl.  O:'.:.. 

And.  as  the  death  (d'  the  principal  does  not  teiiiiinaie  the  obliga- 
tion to  pay  8ti|)ulated  sums  for  a  j;iven  jieriod.  so  the  liability  of 
his  surety  or  {guarantor  continues  aftei-  the  death  of  the  itriucipal. 
Elniendorf  v.  Whitney,  15a  Pa.  Rt.  400,  L'.~  .Ml.  007. 

(j)  Revocation.  ( 'oidra<-ts  of  suretyshi|>  or  Lniaranty  are  irrevoca- 
ble or  revocable  accordinj^  as  the  considei-.ition  is  entire,  or  is  sup- 
plied from  time  to  time,  and  therefore  divisible. 

An  instance  of  the  first  class  is  where  a  person  enters  into  a 
^Miaranty  that,  in  consideiat  ion  of  the  lessor  granting;  a  lease  to  a 
thiid  pers(>n,  he  will  be  answerable  foi-  the  perfoiniance  of  the  cove- 
nants.   The  moment  the  lease  is  granted  there  is  nothing  more  for 


DISCHAIKiK    OF    SIUKIY    OK    Of  A  U  A  NT< 'K.  47 

(tie  lessor  to  <lo,  jiimI  siiili  ii  j^niiiiMiil  V  of  iHTi-ssity  niiis  on  lliroii^rli 
out  llic  duration  of  tlio  lease  'I'lio  Iram*  was  intended  lo  lie  a 
j^Miarantied  lease,  and  t lieiefore  the  ^jnai-antor  cannot  put  an  end  to 
the  ;,Miaiant_v  at  his  pleasni-e.  nor  is  it  to  he  put  an  enil  lo  l»,v  the 
<leatli  of  the  ^Miaiantor.  So  with  a  ^niaianty.  in  consideiat  ion  of 
iin()lher  parly  taking  a  person  into  his  scivicc,  to  he  answerable  for 
his  fidelity  as  lonj^  as  he  continued  thei-<*in.  Instances  of  the  wcond 
class  are  found  in  guaranties  of  a  running  account  at  a  haidicr's.  or 
a  running  account  for  j^oods  supplied.  There  the  consideration  is 
supi)liod  from  time  to  time,  and  it  is  roasonalile  to  hold,  unless  tlie 
;;uaranty  slijnilates  to  the  contrary,  that  the  <,Miarantoi'  may  at  any 
time  terminate  the  ^Miaranty  as  to  sulise(|iicnt  transactions.  In 
sucli  cases,  also,  notice  of  the  death  of  a  guarantor  is  a  sullicient 
notice  to  tcnninate  the  guaranty.  Lloyd's  v.  Harper,  1(5  Ch.  Div.  ''>1!»; 
Calvert  v.  Gordon,  3  Man.  &  R.  124;  Coulthart  v.  Clementson,  5  Q. 
li.  Div.  42;  Snow  v.  Horgan,  IS  K,  I.  28!>.  27  Atl.  338;  National 
Eagle  Bank  v.  Hunt.  Ifi  R.  I.  l.jl,  13  Atl.  ll.'j;  Green  v.  Young,  8 
:Me.  10;  Moore  v.  Wallis.  18  Ala.  403;  Royal  Ins.  Co.  v.  Davies.  40 
Iowa,  471;  Rapp  v.  Insurance  Co.,  113  III.  304;  OlTord  v.  Davies.  12 
C.  P..  (N.  S.)  750,  7."'j7;  Jordan  v.  Dobbins.  122  Mass.  170.  171; 
Menard  v.  Scudder.  7  La.  Ann.  301.  302. 

But  a  surety  bound  for  the  fidelity  and  honesty  of  his  principal, 
and  so  for  an  indefinite  and  contingent  liability,  and  not  for  a  sum 
lixed,  and  certain  to  become  due,  may  revoke  and  end  his  future  lia- 
I'ility  in  either  of  two  cases,  viz.:  Where  the  guarantied  contract 
has  no  definite  time  to  run;  and  where  it  has  such  definite  time, 
but  the  principal  has  so  violated  it  and  is  so  in  default  that  the 
creditor  may  safely  and  lawfully  terminate  it  on  account  of  the 
breach,  Emery  v.  Baltz,  94  N.  Y.  414;  Burgess  v.  Eve,  L.  R.  13  Eq. 
450;  rhillips  v.  Foxall,  L.  R.  7  Q.  B.  000;  Sanderson  v.  Aston.  L.  R.  8 
Exch.  73;   Singer  Mfg.  Co.  v.  Draughan  (X.  C.)  28  S.  E.  130. 


48  SURETYSHIP    AM)    GUARANTY. 


SURETYSHIP  IN  RESPECT   TO    PARTNERSHIPS  AND 
SALES  OF  REALTY. 

12.  (a)  Where  a  partner  withdraws  from  a  tirm,  or  it  is  dissolved, 
aud  it  is  agreed  that  the  otlK?r  shall  take  the  property  and  pay  the 
tirm  debts,  the  latter  becomes  a  princii)al,  and  the  other  a  surety^ 
;ind  the  usual  iiriiiciples  of  suretyshii*  apply,  both  as  between  them- 
selves and  as  to  creditors  with  notice.  Porter  v.  P»axter  (Minn.)  1^ 
N.  W.  SU;  Williams  v.  Boyd,  75  Ind.  28();  Colgrove  v.  Tallman, 
07  X.  Y.  95;  Bizer  v.  Ray,  87  N.  Y.  220;  Chandler  v.  Higgins,  101) 
111.  602;  Barber  v.  Gillson,  18  Nev.  89,  1  Pae.  452;  Oakeley  v.  Pashe- 
leer,  10  Bligh.  548. 

Thus,  if  the  retiring  partner  is  obliged  to  i)ay  a  firm  debt,  he  may 
recover  the  amount  from  the  one  who  remains  (Shanburg  v.  Abbott, 
112  Pa.  St.  12,  4  Atl.  518);  while,  if  the  remaining  partner  pays  the 
debt,  he  is  not  entitled  to  contribution  from  the  one  retiring  (Hanna 
V.  Hyatt,  67  Mo.  App.  308). 

The  same  result  follows  where  one  partner  transfers  his  interest 
in  the  firm  property  and  assets  to  an  outsider,  who  is  thereupon 
admitted  to  the  new  firm,  consisting  of  the  other  members  of  the 
old.    Morss  V.  Gleason,  64  N.  Y.  204. 

But,  to  atfect  a  creditor  who  extends  time  of  payment  or  does 
other  acts  which  would  discharge  a  surety,  he  must  have  notice  of 
the  new  arrangement  and  its  binding  effect.  Palmer  v.  Purdy,  Ki 
X.  Y.  144. 

And  in  some  juiisdictions  it  is  held  that  he  is  not  bound,  even 
by  notice,  unless  he  has  assented  to  the  new  relationship.  Ridgiey 
V.  Robertson,  67  Mo.  Apj).  45. 

(b)  Where  the  owner  of  real  property,  incumbered  by  a  mortgage 
which  he  is  liable  to  ])ay,  sells  the  ecpiity  to  a  purchaser,  who  as- 
sumes and  agrees  to  pay  the  mortgage,  the  grantee  becomes  the 
jtrincipal  in  respect  thereto,  while  the  grantor  becomes  his  surety. 
Curry  v.  Hale,  15  W.  Va.  807;  2  White  &  T.  Lead.  Cas.  Eq.  pt.  1,  p. 
282;  Wager  v.  Link,  VU  N.  Y.  122,  31  N.  E.  213. 

It  follows  that  if,  when  the  debt  becomes  due,  the  guaiantor  pays 
it.  he  bccoiiH  s  entitled  to  be  substituted  to  the  mortgage  security  as 
it  originally  existed,  with  the  right  to  i)roceed  immediately  against 
the  land  for  his  indemnity.    Calvo  v.  Davies,  73  N.  Y.  211. 


PAHTNERSIIIPS    AND    SALKS    OF    RKAI.TY. 


4y 


And  if,  winidul  tho  consent  of  the  grantor,  the  mortgagee  and  the 
grantee  effect  a  release  or  satisfaction  of  the  mortgage,  or  a  binding 
extension  of  the  time  for  i)aynicnt  (Calvo  v.  Da  vies,  73  N.  Y.  211; 
Union  Mut.  Life  Ins.  Co.  v.  llanford,  143  U.  S.  101,  12  Sup.  Ct.  437), 
or  a  change  in  its  terms  (Paine  v.  Jones,  76  N.  Y.  274),  the  grantor 
is  thereby  discharged  either  absolutely  or  to  the  extent  of  his  result- 
ing injury,  in  accordance  with  ]>rinciples  already  stated. 

In  order  to  establish  the  relation  of  principal  and  surety  as  to 
Ihe  grantor  and  the  grantee,  it  is  essential  that  the  grantor  be  him- 
self personally  obligated  to  pay  the  debt,  though  it  is  not  necessary 
that  such  obligation  should  have  been  created  by  the  deed  under 
which  he  acquired  title.  Wager  v.  Link,  134  N.  Y.  122,  31  N.  E.  213; 
Id.,  150  N.  Y.  555,  44  N.  E.  1103. 

It  is  also  essential  that  the  grantee  should  assume  the  payment 
of  the  mortgage.  It  is  not  enough  that  he  take  title  subject  to  the 
mortgage.  Chilton  v.  Brooks,  72  Md.  557,  20  Atl.  125;  Wager  v. 
Link,  150  K  Y.  554,  44  N.  E.  1103;  Crowell  v.  Hospital,  27  N.  J. 
Eq.  650. 

While  it  is  the  generally  accepted  doctrine  that  where  land 
incumbered  by  a  mortgage,  which  the  owner  is  obligated  to  pay,  is 
conveyed  by  him  to  a  grantee,  who  assumes  payment  thereof,  the 
mortgagee  is  entitled  in  some  form  to  enforce  the  agreement  against 
the  grantee,  there  is  a  conflict  upon  the  question  whether  his  remedy 
should  be  at  law  or  in  equity.  Burr  v.  Beers,  24  N.  Y.  178;  Thorp  v. 
Coal  Co.,  48  N.  Y.  253;  Dean  v.  Walker,  107  111.  540,  545,  5.50. 

The  question  whether  the  remedy  is  at  law  or  in  equity  is  to  be 
determined  by  the  lex  fori.  Union  Mut.  Life  Ins.  Co.  v.  Hanford,  143 
U.  S.  190,  12  Sup.  Ct.  437. 

In  New  York  the  right  of  the  mortgagee  has  been  supported  upon 
the  theory  that,  if  one  who  is  indebted  transfers  property  to  a  third 
party  upon  the  latter's  promise  to  pay  the  debt,  the  creditor  may 
sue  the  third  party  upon  the  contract  thus  made  for  the  creditor's 
benefit,  under  the  authority  of  the  line  of  cases  beginning  with 
I^iwrence  v.  Fox,  20  N.  Y.  268;  Wager  v.  Link,  134  N.  Y.  127,  31 
N.  E.  213;  Hand  v.  Kennedy,  83  N.  Y.  154. 

Accordingly,  in  that  state,  the  mortgagee  is  entitled  to  maintain 
his  suit  against  the  grantee,  either  in  equity  or  at  law.     Halsey  v. 
Reed,  9  Paige  (N.  Y.)  446;   King  v.  Whitely,  10  Paige  (N.  Y.)  465; 
SUR.&  G.— 4 


oO  SURETYSHIP    AM)    Cil'ARA.Nl A'. 

IMyor  V.  :\r()nli()ll;ui(l,  2  Saiulf.  Ch.  4TS;  Trottci'  v.  Ilu^lu^s,  12  X. 
Y.  74;  Burr  v.  lioeis,  24  N.  Y.  ITS;  Campbell  v.  Smith,  71  N.  Y.  20; 
Paidt'O  V.  Tivat,  82  N.  Y.  385;  Hand  v.  KimithmIv,  83  N.  Y.  150;  Bow- 
on  V.  Iteck,  04  N.  Y.  8(51. 

Ami  the  ^i  an  tor's  liabilily  to  tlic  mortgagee  is  released  by  a 
binding  extension  of  time  given  by  the  latter  to  the  grantee,  with 
knowledge  of  the  mntual  relations  of  the  grantor  and  grantee,  and 
without  the  grantor's  consent,  even  though  the  mortgagee  did  not 
know  of  that  relation  at  the  time  of  the  original  contract,  or  even 
if  that  relation  has  been  created  since  that  time.  Union  ^fut.  Life 
Ins.  Co.  V.  llanford,  143  I^.  S.  l!ll.  12  Sup.  Ct.  437;  Ewin  v.  Lan 
raster,  0  Best  &  S.  571;  Oriental  F.  Corp.  v.  Overend,  7  Ch.  App.  142, 
and  L.  R.  7  H.  L.  348;  Smith  v.  Shclden,  35  Mich.  42. 

As  to  the  form  of  remedy,  however,  the  United  States  sujireme 
court  has  approved  thQ  doctrine  that  w^liile  the  purchaser  of  lands 
subject  to  mortgage,  who  assumes  and  agrees  to  pay  the  mortgage 
debt,  becomes,  as  between  himself  and  his  vendor,  the  principal 
debtor,  and  the  liability  of  the  vendor,  as  between  the  ])arties,  is 
that  of  surety,  and  if  the  vendor  pays  the  mortgage  debt  he  may 
sue  the  vendee  at  law  for  the  moneys  so  paid,  yet  in  equity,  as  at  law, 
the  contract  of  the  purchaser  to  pay  the  mortgage,  being  made 
with  the  mortgagor  and  for  his  beni^tit  only,  creates  no  direct  obli- 
gation of  the  purchaser  to  the  mortgagee.  And  it  has  a])proved  the 
doctrine  that  it  is  in  application  of  the  equitable  ]»rinciple  that  a 
creditor  may  have  the  benefit  of  all  collateral  obligations  for  the 
payment  of  the  debt,  which  a  person  standing  in  the  situation  of  a 
surety  for  others  holds  for  his  indemnity,  that  decrees  for  deficiency 
in  foreclosure  suits  have  been  made  against  subsecpient  ]»ur('hasers, 
who  have  assumed  the  paynuMit  of  the  mortgage  debt.  The  mort- 
gagee, upon  this  theory,  is  allowed,  by  a  mere  rule  of  ])rocedure, 
to  go  directly,  as  a  creditor,  against  the  person  ultimately  liable,  in 
order  to  avoid  circuity  of  action,  and  save  the  mortgagor,  as  the 
intermediate  party,  from  being  harassed  for  the  payment  of  the  debt, 
and  then  driven  to  seek  relief  over  against  the  ])erson  wlio  has 
indemnified  him.  and  upon  whom  the  liability  will  ultimately  fall. 
Tlie  mortgagee's  only  remedy  against  the  grantee  is  in  ecpiity.  In 
such  a  case,  therefore,  a  mortgagee,  who  has  in  no  way  acted  (in 
the  failh  of,  or  otherwise  made  himself  a  party  to,  the  agreement  of 


I>AKTM;U-IIirS    AND    SALKS    OF    REALTY.  51 

the  mortgnj^'or's  <,n;iiit<v  to  pay  the  moHgngo,  has  no  greater  right 
than  the  mortgagor  has  against  the  grantee,  and  therefore  cannot 
object  to  the  striking  out  by  a  conrt  of  ecpiity,  or  to  the  release  by 
the  mortgagor,  of  such  an  agreement,  when  inserted  in  tlie  deed 
by  mistake;  and,  on  the  other  hand,  such  an  agreement  does  not, 
without  the  mortgagee's  assent,  put  the  grantee  and  the  mortgagor 
in  the  relation  of  principal  and  surety  towards  the  mortgagee,  so 
that  the  latter,  by  giving  time  to  the  grantee,  will  discharge  the 
mortgagDr.  Keller  v.  Ashford,  133  U.  S.  GIO,  10  Sup.  Ct.  494;  Elliott 
V.  Sackett,  108  U.  S.  132,  2  Sup.  Ct.  375;  Drury  v.  Hayden,  111  U. 
S.  223,  4  Sup.  Ct.  40.5;  Shepherd  v.  May,  115  U.  S.  50.5,  511,  0  Sup. 
Ct.  119;  Episcopal  City  Mission  v.  Brown,  158  U.  S.  227,  15  Sup.  Ct. 
833;  Crowell  v.  Currier,  27  N.  J.  Eq.  152,  s.  c.  sub  nom.  Crowell  v. 
Hospital,  Id.  650,  655,  656. 


WEST    PLBL18HIN0   CO.,  PRINTERS  i.ND  8TEBEOTVPER8,  BT.  PAUL,  MINN. 


PRINCIPLES 


OF  THE 


LAW  OF   INTEREST  AND  USURY 


A  MONOGRAPH 


St.  Paul,  Minn. 

WEST  PUBLISHING  CO. 

1899 


Copyright,  1899, 

BY 

WEST  PUBLISHING  COMPANY, 


INTEREST   AND    USURY. 


INTEREST. 


1.  INTEREST  DEFINED. 

Interest  is  the  compensation  fixed  by  agreement  or  allowed  by  law 
for  the  use  oi-  detention  of  money,  or  for  the  loss  thereof  to  the  party 
entitled  to  its  use.^ 

2.  WHEN  INTEREST  IS  ALLOWED. 

When  interest  is  allowed  in  any  case,  it  must  be  by  virtue  of  some 
contract,  express  or  implied,  or  by  virtue  of  some  statute,  or  on  ac- 
count of  the  default  of  the  party  liable  to  pay;  and  then  it  is  allowed 
as  damages  for  the  default.^ 

By  the  common  law,  interest  could  in  no  case  be  recovered.  The 
first  English  statute  allowing  interest  was  that  of  37  Hen.  Vm.  c.  9.» 

Even  after  that  time,  the  common-law  rule,  as  expounded  in  Eng- 
land, allowed  interest  only  upon  mercantile  securities,  or  in  those  cases 
where  there  had  been  an  express  promise  to  pay  interest,  or  where 
such  promise  was  to  be  implied  from  the  usage  of  trade.* 

In  the  absence  of  these  conditions,  interest  was  not  allowed  in  an 
action  for  money  lent,  or  for  money  had  and  received,  or  for  money 
paid,  or  on  an  account  stated,  or  for  goods  sold,  even  though  to  be 
paid  for  on  a  particular  day,  or  for  work  and  labor.'' 

1  Sutb.  Diiui.  §  300;  Sedg.  Meas.  Dam.  §  282;  Loudon  v.  Taxing  Dist.  104 
U.  S.  771;  Minard  v.  Beans.  G4  Pa.  St.  411;  Daniels  v.  Wilson,  21  Minn.  .".30; 
Davis  V.  Yuba  Co.,  75  Cal.  452.  13  Tac.  874,  and  17  Pac.  533. 

2  In  re  Trustees  of  New  York  &  B.  Bridge,  137  N.  Y.  98.  .32  N.  E.  1054; 
Barnard  v.   Bartholomew,   22  Pick.   (Mass.)   21)1. 

■■*  National  Bank  of  Commonwealth  v.  Mechanics'  Nat.  Bank,  94  U.  S.  437. 
*  Mayne,  Dam.  105:    Higgins  v.  Sargent.  2  Barn.  &  C.  349. 
6  White  V.  Miller,  78  N.  Y.  394;    Gordon  v.  Swan,  12  East,  419;    Calton  v. 
INT.&U.-l 


2  INTEREST. 

Thus  the  law  ivniaincd  in  Enfilnnd  until  SI.  .'I  &  4  \N'm.  IV.  c.  42, 
§§  28,  29,  providing-  that  upon  all  debts  or  sums  ceitain,  and  in  actions 
of  trover  and  trespass  de  bonis  asportatis,  and  in  actions  nj)on  policies 
of  insurance,  the  jui-v  may,  in  Iheh'  discretion,  allow  interest  as  part 
of  the  recovery.  Independently  of  this  statute,  interest  was  allowed 
as  special  damages  for  the  detention  of  money,  but  it  must  be  specially 
I)leaded.*' 

In  America  some  states  hold  that  the  right  to  interest  is  given  by  the 
common  law." 

In  other  states,  however,  it  is  held  that  the  common  law  gives  no 
right  to  interest,  but  merely  allows  the  parties  to  contract  for  it,  and 
that,  unless  the  right  is  given  by  contract  or  statute,  it  cannot  be  re- 
covered.* 

In  all  the  states  the  matter  of  interest  is  largely  regulated  by  statute. 
In  New  York  the  allowance  of  interest  was  at  first  mainly  confined 
to  cases  coming  within  the  common-law  rule,  and  to  actions  to  recover 
money  wrongfully  detained  by  the  defendant.  The  rule  was  then  ex- 
tended so  as  to  allow  interest  upon  the  value  of  property  unjustly  de- 
tained or  wrongfully  taken  or  converted,  and  for  goods  sold  and  deliv- 
ered, and  for  work  and  labor;  and  thus,  by  a  sort  of  judicial  legisla- 
tion, the  allowance  of  interest,  as  a  legal  right,  was  carried  much  fur- 
ther here  than  the  scope  of  the  English  statute  where  the  allowance 
was  placed  simply  in  the  discretion  of  the  jury.  There  is  no  New  York 
statute  regulating  the  allowance  of  interest  in  any  of  these  cases. ^  In 
some  states  such  statutes  exist.^** 

Bragg.  15  East,  22?.:  Walker  v.  Constable,  1  Bos.  &  P.  HOG;  Carr  v.  Edwards. 
3  Starkie,  132:  Nicliol  v.  Thompson,  1  Gamp.  52,  note;  Trelawney  v.  Thomas, 
1    H.   Bl.  30:j. 

6  Watkins  v.  Morgan,  6  Car.  &  P.  G61;  Price  v.  Railway  Co.,  10  Mees.  & 
W.  244;  Cameron  v.  Smith,  2  Barn.  &  Aid.  305;  Cook  v.  Fowler,  L.  R.  7  H. 
L.  27. 

7  Young  V.  (Jodhe,  15  Wall.  502:  Young  v.  Pohuk.  ;5  Cal.  20S;  Wood  v.  Rob- 
bins.  11  Mass.  504;   Boyd  v.  Gilchrist,  15  Ala.  849. 

8  Parmelee  v.  Lawrence,  48  111.  331;  Denver,  S.  P.  &  P.  R.  Co.  v.  Conway, 
8  Colo.  1,  5  Pac.  142;    Kenney  v.  Railroad  Co.,  03  Mo.  99. 

»  White  V.  Miller,  78  N.  Y.  395. 

10  New  York,  L.  E.  &  W.  R.  Co.  v.  Estill,  147  U.  S.  019.  13  Sup.  Ct.  444; 
Morley  v.  Railway  Co..  140  U.  S.  108,  13  Sup.  Ct.  54. 

^A'here,  for  any  reason,  tiie  defendant  is  not  responsilile  for  the  delay  in  pny- 
ment,  he  is  not  chargeable  with  interest.     Thus,  lender  of  a  sulticieul  amount 


WHEN    INTEREST    IS    ALLOWED.  •-> 

By  Contract. 

Interest  on  a  [jrinciiial  snni  may  be  stipulated  for  in  the  contract 
itself,  either  to  run  from  the  date  of  the  contract  until  it  nuitines  or 
until  payment  is  made.'^  The  agreement  for  interest  may  be  either 
express  or  implied,  and  an  agreement  to  that  effect  will  be  implied 
where  there  was  a  custom  to  charge  interest,  which  was  known  to  the 
defendant.^-  But  ''intei-est  does  not  run  u])on  a  contract,  unless  es- 
pecially provided  for  therein,  until  the  time  fixed  for  payment."  '^ 

In  an  action  for  breach  of  contract,  whether  interest  is  recoverable 
does  not  rest  in  the  discretion  of  the  jury,  but  it  is  a  question  of  law  for 
the  court.^*  Whether,  in  a  given  case,  interest  is  recoverable  as  mat- 
ter of  law,  depends  in  part  upon  statutes  and  in  part  upon  principles  to 
be  hereafter  stated,^  ^ 

will  stup  the  accruing  of  interest,  even  in  actions  of  tort.  Thompson  v.  Rail- 
road Co.,  58  N.  n.  r)J4.  Where  the  debtor  is  forbidden  by  law  to  pay  the 
debt,  he  is  not  liable  for  interest  during  the  delay.  Thus,  trustee  process  or 
injunction  will  interrupt  the  running  of  interest.  Le  Grange  v.  Hamilton,  4 
Term  R.  613;  Hamilton  v.  Le  Grange,  2  H.  Bl.  144;  Osborn  v.  Bank,  9  Wheat. 
738;  Norris  v.  Hall,  18  Me.  332;  Bickford  v.  Rich,  105  Mass.  340;  Le  Branth- 
wait  V.  Halsey,  9  N.  J.  Law.  3;  Kellogg  v.  Hickok.  1  Wend.  (N.  Y.)  521: 
Stevens  v.  Barringer,  13  Wend.  (N.  Y.)  039.  In  some  states  a  garnishee  of 
person  enjoined  must  bring  the  money  into  court,  or  he  will  be  chargeable  with 
interest.  Kirkman  v.  Vanlier,  7  Ala.  217;  Smith  v.  Bank,  60  Miss.  69.  Inter- 
est as  damages  does  not  accrue  in  time  of  war,  where  the  debtor  is  in  one 
hostile  country  and  the  creditor  in  the  other.  Interest  accruing  by  contract 
is  not  affected.  Hoare  v.  Allen,  2  Dall.  102;  Foxcraft  v.  Nagle,  Id.  132;  Bigler 
V.  Waller,  Chase,  316,  Fed.  Cas.  No.  1,404;  Mayer  v.  Reed,  37  Ga.  482;  Selden 
V.  Frestou,  11  Bush  (Ky.)  191;  Bordley  v.  Eden,  3  Har.  &  McH.  (Md.)  167; 
Brewer  v.  Ilastie.  3  Call  (Va.)  22;  Lash  v.  Lambert,  15  Minn.  416  (Gil.  336j; 
Brown  v.  Hiatts,  15  W.hII.  177;  Ward  v.  Smith,  7  Wall.  447.  Generally,  as  to 
what  will  relieve  a  debtor  from  interest,  see  Miller  v.  Bank,  5  Whart.  (Pa.)  503; 
Redlield  v.  Iron  Co.,  110  U.  S.  174,  3  Sup.  Ct.  570;  Bartells  v.  Redfield,  27  Fed. 
286;  Stewart  v.  Schell,  31  Fed.  65;  Jane  v.  Hagcu,  10  Humph.  (Tenn.)  332. 

11  Morley  v.  Railway  Co.,  346  U.  S.  168,  13  Sup.  Ct.  .54. 

12  Ayers  v.  Metcalf,  39  III.  307;  Veiths  v.  Hagge,  8  Iowa,  163;  McAllister  v. 
Reab,  4  Wend.  (N.  Y.)  483,  8  AYend.  (N.  Y.)  109;  Meech  v.  Smith,  7  Wend.  (N. 
Y.)  315;  Dickson  v.  Surginer.  3  Brev.  (S.  C.)  417;  Fisher  v.  Sargent,  10  Cush. 
(Mass.)  250;  Knox  v.  Jones.  2  Dall.  193;  Bispham  v.  Pollock.  1  McLean,  411, 
Fed.  Cas.  No.  1,442;  Koous  v.  Miller,  3  Watts  &  S.  (Pa.)  271;  Watt  v.  Hoch, 
25  Pa.  St.  411;   Adams  v.  Palmer,  30  Pa.  St.  346. 

13  In  re  Clever's  Estate.  154  Pa.  St.  482,  25  Atl.  814. 

1*  Mansfield  v.  Railroad  Co.,  114  N.  Y.  336,  21  N.  E.  735,  1037. 

15  Lewis  v.  Rountree,  79  N.  C.  122,  128;    Dana  v.  Fiedler,  12  N.  Y.  40-50; 


4  INTEREST. 

Tnterrst  on  Promi'^ftoi'ij  N^ofes. 

"The  words  'with  interest,'  in  a  contract, — as,  for  example,  in  a 
promissory  note, — imply  a  promise  to  pay  interest  from  date.  With- 
out them,  the  note  would  carry  interest  from  maturity,  as  matter  of 
law."  ^'  A  promissory  note  payable  on  demand,  and  making  no  pro- 
vision for  interest,  carries  interest,  not  from  its  date,  but  from  de- 
mand.^'^  If  no  time  of  payment  is  specified,  interest  begins  to  accrue 
at  once,  though  not  provided  for.^" 

Interest  on  Insurance  Policies. 

Interest  is  recoverable  on  the  amount  due  on  an  insurance  policy.^** 

Interest  on  Coupons. 

Coupons  attached  to  bonds,  and  representing  the  interest  payable 
upon  the  principal,  may  or  may  not  themselves  carry  interest,  according 
to  circumstances.  While  they  are  in  the  hands  of  the  holder  of  the 
bond,  though  detached  and  overdue,  they  remain  mere  incidents  of  the 
bond,  and  have  no  greater  force  and  effect  than  the  stipulation  for  the 
payment  of  interest  contained  in  the  bond.  But  they  may  become 
separate  and  independent  instruments.  Tliis  does  not  occur  until  they 
are  utilized  as  such.^" 

In  some  states,  however,  coupons,  though  still  attached  to  the  bonds, 
carry  interest  from  the  time  when  payable."^  And  if  the  law  of  a 
state,  as  it  exists  when  bonds  with  coupons  are  issued,  allows  interest 
on  coupons  from  the  time  when  they  fall  due,  the  legislature  has  no 

Brougbton  v.  :Mitcb('ll,  04  Ala.  210;  Hamer  v.  Hathaway,  33  Cal.  117;  An- 
drews V.  Durant,  18  N.  Y.  4D(>;  De  Lavallette  v.  Wendt.  7")  X.  Y.  ,57i);  Kobinsou 
V.  Insurance  Co.,  1  Abb.  Prae.  N.  S.  (N.  Y.)  ISO;  AVeble  v.  Butler,  43  How. 
Prac.  (N.  Y.)  5;   Rhemke  v.  Clinton,  2  Utah,  230. 

16  Smith  V.  Goodlett,  92  Tenn.  230,  21  S.  W.  106;  Gibbs  v.  Fremont,  9  Exch. 
25;   Kitchen  v.  Bank,  14  Ala.  233;   Swett  v.  Hooper,  02  Me.  54. 

17  Bishop  V.  Snitren,  1  Daly  (N.  Y.)  155;  2  Pars.  Notes  &  B.  393;  Herrick 
V.  Woolverton,  41  N.  Y,  581,  596;  Hunter  v.  Wood,  54  Ala.  71;  Dodge  v. 
Perkins,  9  Pick.  (Mass.)  369. 

18  Purdy  V.  Philips,  11  N.  Y.  400;  Sheldon  v.  Heaton,  88  Hun.  535,  34  N.  Y. 
Supp.  850. 

19  Swamscot  Mach.  Co.  v.  Partridge,  25  N.  H.  369,  380. 

20  Williamsburgh  Sav.  Bank  v.  Town  of  Solon,  130  N.  Y.  405,  481.  32  N.  E. 
1058;  Bowman  v.  Neely,  137  111.  443,  447,  27  N.  E.  758;  Id.,  151  111.  37,  37  N. 
E.  840;    Kvertson  v.  Bank,  06  N.  Y.  14. 

21  Mills  V.  Town  of  Jefferson,  20  Wis.  50;  Celpcke  v.  City  of  Dubuque,  1 
Wall.  175,  200;   Aurora  City  v.  West,  7  Wall.  82,  104. 


VVUKN    INTEREST    IS    ALLOWED.  O 

power,  even  in  the  form  of  a  retroactive  declaration  as  to'  what  the 
former  law  was,  to  change  this  principle  as  to  such  coupons,  and  cut 
off  the  right  to  interest  thereon.-^ 

By  Statute. 

Interest  is  frequently  provided  for  by  statute;  as,  for  example,  from 
the  maturity  of  certain  debts  until  judgment,^^  or  upon  judgments,^* 
in  both  which  cases  the  interest  is  in  the  nature  of  damages.  And 
sometimes  the  right  to  interest  as  compensation,  and  not  as  damages, 
also  rests  upon  statute;  as,  for  example,  in  statutes  relating  to  con- 
demnation proceedings,  and  providing  that  title  shall  vest  in  the  city 
upon  confirmation  of  the  commissioners'  report,  and  that  the  comp- 
troller shall  pay  the  compensation  awarded,  "with  lawful  interest  from 
the  date  of  confirmation."  ^^ 

In  some  states  there  are  statutes  providing  that  interest  shall  be  al- 
lowed "on  money  withheld  by  an  unreasonable  and  vexatious  delay  of 
payment."  In  such  a  case  interest  is  not  to  be  computed  merely  from 
the  time  when  the  delay  began  to  be  unreasonable  and  vexatious,  but 
is  to  be  computed  from  the  time  when  the  debt  became  due.-® 

As  Damages. 

Interest  is  given  on  money  demands  as  damages  for  delay  in  pay- 
ment, being  just  compensation  to  the  plaintiff  for  a  default  on  the  part 
of  the  debtor. 

(a)  Where  it  is  expressly  reserved  in  the  contract,  or  is  implied  by 
the  nature  of  the  promise,  it  becomes  part  of  the  debt,  and  is  recover- 
able as  of  right;  but  when  it  is  given  as  damages  it  is  often  matter  of 
discretion.-^ 

2  2  Kosbkouong  v.  Burton,  104  U.  S.  668,  676. 

23  Morley  v.  Railway  Co.,  146  U.  S.  168,  13  Sup.  Ct.  54. 

24  Code  Civ.  Proc.  N.  Y.  §  1211;   O'Brien  v.  Young,  95  N.  Y.  428. 
2  5  Devlin  v.  City  of  New  York.  131  N.  Y.  123,  30  N.  E.  45. 

2  0  City  of  Chicago  v.  Tebbetts,  104  U.  S.  120,  125. 

2T  Redfield  v.  Iron  Co.,  110  U.  S.  176,  3  Sup.  Ct.  570;  Jourolmon  v.  Ih\ing, 
26  C.  C.  A.  23,  80  Fed.  604.  See  Mansfield  v.  Railroad  Co.,  114  N.  Y.  336,  21 
N.  E.  735,  1037. 

Interest  may  therefore  be  demanded  in  a  declaration  or  complaint  in  an  action 
to  recover  the  principal,  and  is  computed  to  the  time  of  verdict  or  judgment. 
"The  interest  is  an  accessory  to  the  principal,  and  the  plaintiff  cannot  bring 
a  new  action  for  any  interest  grown  due  between  the  commencement  of  his 
action  and  the  judgment  in  it.     *     *     •     I  don't  know  of  any  court  in  any 


()  INI'KKKST. 

lb)  If  tlic  cunlriicl  (l(»('s  not  jtioxidc  foi-  iiilcifsl  .iftcr  iiiiihiiitv  and 
failiiic  1o  jtav.  llic  (pu'sl  ion  wliclhcr  iiiU'ifsi  shall  accnic  depends 
wholly  on  tlie  hiw  of  tlie  slate.  If  the  stale  declares  that,  in  ease  of 
breaeli,  interest  shall  accrue,  such  interesl  is  in  the  nature  of  damaji;es, 
and,  as  botweon  the  jiarlies  to  the  contract,  such  interest  will  continue 
to  mil  until  i>a\nieMt.  oi-  until  the  owner  of  the  cause  of  action  elects 
to  nierjit'  it  into  judgment.-'" 

ic)  At  conmion  law,  neitlier  verdicts  nor  jud.i;nien<.s  bore  interest,'^® 
but  no^^ ,  after  the  cause  of  action,  whether  a  tort  or  a  broken  contract, 
not  itself  prescribing  interest  till  payment,  shall  have  been  merged  into 
a  judgment,  whether  interest  shall  accrue  upon  the  judgment  is  a  mat- 
ter not  of  contract  between  the  i)arties,  but  of  legislative  discretion, 
which  is  free,  so  far  as  the  federal  constitution  is  concerned,  to  provide 
for  interest  as  a  peiKilty.  or  licpiidated  damages  for  the  noni)ayment 
of  the  judgment,  or  not  to  do  so.  When  such  provision  is  made  by 
statute,  the  owner  of  the  judgment  is  entitled  to  the  interest  so  pre- 
scribed until  payment  is  received,  oi'  until  the  state  shall,  in  the  exer- 
cise of  its  discretion,  change  the  rate  or  declare  that  such  interest 
shall,  from  then  on,  cease  to  accrue.  For  such  purposes  the  judgment 
is  not  a  contract,  and  conse(|nently  such  a  statutory  declaration  is  not 
within  the  prohibition  of  the  federal  constitution  against  impairing 
contracts,  or  depriving  one  of  i)roperty  without  due  process  of  law.^" 

country  (and  I  have  looked  into  the  matter)  which  don't  carry  interest  down  to 
tlie  last  act  by  which  the  sum  is  liquidated."  Lord  Mansfield,  in  Robinson  v. 
Bland,  2  Burrows,  1087. 

2  8  Morley  v.  Railway  Co.,  146  U.  S.  108,  13  Sup.  Ct.  54. 

2!'  Massachusetts  Ben.  Ass'n  v.  Miles,  i;!7  IJ.  S.  091,  11  Sup.  Ct.  234. 

3  0  Morley  v.  Railway  Co.,  140  U.  S.  lOii.  i:'.  Sup.  Ct.  .")4;  O'Biieu  v.  Young, 
9.J  N.  Y.  42S. 

It  is  usually  held  that  inleivst  is  recovcfaldc  in  an  action  of  di-bt  on  a  .iudg- 
uient.  regardless  of  whether  llie  original  demand  carried  interest  or  not.  Klock 
V.  Rol)inson,  22  Wend.  (X.  Y.)  l.">7.  It  is  held  in  sonic  states  to  be  recoverable 
by  common  law.  Perkins  v.  I'oiuniiiucl.  14  How.  .".28.  .".31;  Crawford  v. 
Sinionton's  E.x'rs,  7  Port.  (Ala.)  110;  (Jwinn  v.  Wliilaker's  Adm'x,  1  Har.  & 
.1.  Qld.)  7."4;  llodgdon  v.  Ilodgdon,  2  X.  II.  1(J'.>;  .Mahufin  v.  Bickford,  0  X.  H. 
.■'.<i7:  Harrington  v.  (ilenn,  1  IliM  (S.  ('.)  7!i;  Xelson  v.  i'ddrr.  7  Hicli.  Kq.  (S. 
r.i  :;!».":  Beall  v.  Silver.  2  Uaiid.  (\'a.)  401:  Mercer's  .Vdiii  r  v.  Bcalc.  4  Leigh 
(Va.)  189;  Booth  v.  Ableman,  20  Wis.  002.  It  is  recoverable  by  statute. 
Douglierty  v.  Miller,  .".8  Cal.  'AH;  Brigham  v.  Vanbuskirk.  (!  B.  .Mon.  (Ky.)  107; 
Todd  V.  Botchl'ord,  80  N.  Y.  517;   Coles  v.  Kelsey,  13  Tex.  75;   Ilagood  v.  Aikin, 


WllKN    INTERK8T    IS    ALl.OWKD.  < 

^>o,  in  some  states,  it  is  provided  by  statute  lliiil  interest  may  be 
recovered  upon  the  amount  awarded  by  a  verdict,  to  be  computed  from 
the  date  thereof,  Ihe  jud^nnent  to  be  entered  for  the  amount  of  the 
verdict  with  such  interest.'*^ 

So,  under  the  national  banking  act,  the  claim  of  a  dejxjsitor,  in  a  bank 
which  has  suspended,  is,  after  being  proved  to  the  satisfaction  of  the 
conijitroller,  of  tlie  same  efficacy  as  a  judgment,  and  bears  interest  as 
a  judgment  would  do.^- 

Rate  leticeen  Default  and  Judgment. 

By  the  law  of  many  states,  contracts  drawing  a  specified  rate  of 
interest  before  maturity  draw  the  same  rate  of  interest  afterwards.^^ 
While  in  others  the  contract  rate  in  such  a  case  continues  only  until 
maturity,  and  from  then  on  the  statutory  rate  prevails.^*  And  even 
in  states  where  the  statutory  rate  prevails  after  maturity,  in  the  ab- 
sence of  any  contrary  provision  in  the  contract,  a  provision  for  a  speci- 
fied rate  of  interest  "until  payment"  continues  the  contract  rate  in 
force  after  maturity;-'"'  and  so  where  the  stipulation  is  for  interest 
"annually."  ^®  But  this  latter  rule  does  not  apply  where  the  agree- 
ment is  to  pay  a  principal  sum  in  installments,  at  specified  dates,  with 
interest  at  a  specified  rate  "on  all  sums  remaining  unpaid."  Such  a 
provision  refers  only  to  the  sums  not  due  at  any  given  time.     After 

57  Tex.  511.  It  was  held  not  recoverable,  without  statute,  in  Reece  v.  Knott, 
3  Utah,  451,  24  Pac.  757.  See,  also,  Guthrie  v.  Wickliffs.  4  Bibb  (Ky.)  541; 
Cogwell's  Heirs  v.  Lyon,  3  J.  J.  Marsh.  (Ky.)  38. 

31  Code  Civ.  Proc.  N.  Y.  §  1235;  Massachusetts  Ben.  Ass'n  v.  Miles,  137  U.  S. 
691,  11  Sup.  Ct.  234;   Munsell  v.  Flood,  46  N.  Y.  Super.  Ct.  134. 

32  National  Banlc  of  Commonwealth  v.  Mechanics'  Nat.  Bank,  iM  U.  S.  439. 

33  Hand  v.  Armstrong,  IS  Iowa,  324;  Brannon  v.  Hursell,  112  Mass.  63; 
Marietta  Iron  Works  v.  Lottimer,  25  Ohio  St.  621;  Phinney  v.  Baldwin,  16  111. 
108;   Kohler  v.  Smith,  2  Cal.  597;    Ohio  v.  Frank,  103  U.  S.  697. 

3  4  O'Brien  v.  Young,  95  N.  Y.  430;  Holden  v.  Trust  Co.,  100  U.  S.  72; 
Brewster  v.  Wakefield,  22  How.  118;  Burnhisel  v.  Firman,  22  Wall.  170;  Cook 
V.  Fowler,  L.  R.  7  H.  L.  27;  Kohler  v.  Smith,  2  Cal.  597;  First  Ecclesiastical 
Society  of  Sufheld  v.  Loomis,  42  Conn.  570;  Jefferson  Co.  v.  Lewis,  20  Fla.  980; 
Brown  v.  Hardcastle,  63  Md.  484;  Asluielot  R.  Co.  v.  Elliot,  57  N.  H.  397; 
Pearce  v.  Heunessy,  10  R.  I.  223;  Kitchen  v.  Bank,  14  Ala.  233.  See  Crom- 
well V.  Sac  Co.,  96  U.  S.  51. 

3  5  O'Brien  v.  Young.  95  N.  Y.  430. 

36  Westfield  v.  Westlield,  19  S.  C.  85. 


I.NTKKKST. 


they  become  due.  and  then  remain  unpaid,  the  statutory  rate  prevails." 

AN'htMo  a  note  is  i)ayable  on  demand,^'^  or  one  day  after  date/'*  the 
intent  to  make  a  continuing  obligation  is  obvious,  and  therefore  inter- 
est >vill  be  allowed  at  the  stipulated  rate. 

Interest  as  damages  is  given  at  the  statutory  rate.*"  Where  no  rate 
is  fixed  by  statute,  it  is  given  at  the  customary  rate.*'  Where  the 
statutory  rate  is  changed  after  interest  begins  to  accrue,  interest,  as 
damages,  accrues  thereafter  at  the  new  rate.*-  But  otherwise  where 
it  is  not  allowed  as  damages.*^ 

In  an  action  to  recover  possession  of  bonds,  the  fact  tliat  they  only 
bore  4  per  cent,  interest  is  immaterial  on  the  rate  to  which  plaintiffs 
are  entitled  to  recover,  from  the  date  of  demand,  in  addition  to  the 
amount  found  to  represent  the  value  of  the  bonds.  Upon  demand,  the 
plaintiff  is  entitled  to  either  the  bonds  or  to  their  value,  and  from  that 
time  on,  if  the  bonds  cannot  be  restored,  to  their  value,  with  interest 
thereon  at  the  legal  rate.** 

In  an  action  on  a  contract,* ^^  interest  should  be  given  at  the  rate  of 
the  place  of  performance,  or  of  the  place  where  the  contract  was 
made.*^     The  parties  may  legally  agree  upon  interest  at  the  rate  either 

3  7  Ferris  v.  Hard,  135  N.  Y.  365,  32  N.  E.  12i).  Comparo  Miller  v.  Hall,  18 
S.  C.  141. 

3  8  Paine  v.  Caswell,  68  Me.  80. 

3  9  Casteel  v.  Walker,  40  Ark.  117;  Gray  v.  Briscoe,  6  Bush  (Ky.)  687; 
Sharpe  v.  Lee,  14  S.  C.  341. 

4  0  ^^'t"gner  v.  Bank,  76  Wis.  242,  44  N.  W.  1096. 

*i  Davis  v.  Greely,  1  Cal.  422;   Perry  v.  Taylor,  1  Utah.  63. 

4  2  Wilson  v.  Cobb,  31  N.  J.  Eq.  91;  White  v.  Lyons,  42  Cal.  279;  Wood- 
ward V.  Woodward,  28  N.  J.  Eq.  119;  In  re  Doremus'  Estate.  33  N.  J.  Eq.  2:U; 
Mayor,  etc.,  of  .Jersey  City  v.  O'Callaghan.  41  N.  .7.  Law.  349;  Reese  v.  Ruther- 
furd,  90  N.  Y.  644;  Sanders  v.  Railway  Co.,  94  N.  Y.  641;  O'Brien  v.  Young, 
95  N.  Y.  428;    Stark  v.  Olney,  3  Or.  88. 

4  3  Wyckoff  v.  Wyckoff,  44  N.  J.  Eq.  56,  13  Atl.  602.  Compare  Searle  v. 
Adams,  3  Kan.  515. 

4  4  Govin  v.  De  Miranda,  140  N.  Y.  479,  35  N.  E.  026. 

4  5  Pana  v.  Bowler,  107  U.  S-  529,  2  Sup.  Ct.  704;  Sulro  Tunnel  Co.  v.  Segre- 
gated Belcher  Min.  Co.,  19  Nev.  121,  7  Pac.  271. 

46  Gibbs  V.  Fremont,  9  Exch.  25;  Courtois  v.  Carpentier,  1  Wash.  C.  C.  376, 
Fed.  Cas.  No.  3,285;  French  v.  French,  126  Mass.  360;  Pauska  v.  Daus,  31 
Tex.  67;   Porter  v.  Munger,  22  Vt.  191. 


WJIKN    INTERKST    IS    ALLOWED. 


9 


of  the  state  where  the  contract  is  executed  or  where  payment  is  to  be 
made."^  Wlicre  no  rate  is  stipulated,  the  law  of  the  state  where  the 
contract  was  to  be  performed  is  usually  controlling."* 

But  it  has  been  lield  (hat  interest  on  overdue  coupons  should  be 
given  at  the  rate  of  the  place  where  the  action  was  brought."'*  The 
question  of  the  rate  of  interest  is  a  local  one,  and  the  federal  courts  fol- 
low the  local  law  in  a  given  case,''"  even  as  applied  to  interest  on 
judgments  in  actions  removed  from  a  state  court.*** 

Rate  after  Judgment. 

The  parties  may,  by  their  contract,  stipulate  that  a  specified  rate  of 
interest  shall  be  paid  after  judgment.  Such  is  sometimes  held  to  be 
the  effect  of  a  provision  in  the  contract  that  interest  shall  be  at  a  speci- 
fied rate  "until  payment."  ^"  While  sometimes  that  clause  is  under- 
stood to  refer  to  payment  of  the  principal  sum  as  such,  as  distinguished 
from  the  payment  of  a  judgment  therefor;  and  under  that  construction 
the  contract  provision  ceases  to  be  operative  when  the  creditor,  after 
maturity  of  the  debt,  elects  to  merge  it  in  a  judgment. ^^ 

Apart  from  the  effect  of  a  special  contract  provision,  the  rate  of  in- 
terest upon  a  judgment  depends  upon  the  terms  of  the  statute  of  the 
state,  so  far  as  concerns  the  enforcement  thereof  in  that  state;  but,  if 
an  action  is  brought  in  another  state  upon  the  judgment,  the  rate  of 
interest  recoverable  is  that  allowed  by  the  latter,^*  and,  if  the  original 
action  is  brought  in  a  federal  court,  interest  is  allowed  on  the  judgment 
in  all  cases  where,  by  the  law  of  the  state  in  which  such  court  is  held, 
interest  may  be  levied  under  process  of  execution  on  judgments  recov- 
ered in  the  courts  of  such  state,  to  be  calculated  at  the  rate  so  allowed 
from  the  date  of  the  judgment;  and  interest  may  also  be  computed 

4  7  Pecks  V.  Mayo,  14  Vt.  33;   Kilgore  v.  Dempsey,  25  Ohio  St.  41.3. 
48  Hunt's  Ex'r  v.  Hall,  37  Ala.  702;  Vou  Hemert  v.  Porter,  11  Mete.  (Mass.) 
210;   Cartwriglit  v.  Greene,  47  Barb.  (N.  Y.)  9. 

4  9  Fauntleroy  v.  Hannibal,  5  Dill.  219,  Fed.  Cas.  No.  4,692. 

50  Massachusetts  Ben.  Ass'n  v.  Miles,  137  U.  S.  691,  11  Sup.  Ct.  234. 
ci  id. 

5  2  Morley  v.  Railway  Co.,  146  U.  S.  168,  13  Sup.  Ct.  54. 
53  O'Brien  v.  Young,  95  N.  Y.  430. 

r.4  Morley  v.  Railway  Co.,  146  U.  S.  171,  13  Sup.  Ct.  54;  Parlier  v.  Thompson, 
3  Pick.  (Mass.)  429;  Hopkins  v.  Shepard,  129  Mass.  600;  Nelson  v.  Felder,  7 
Rich.  Eq.  (S.  C.)  395.  See  Crone  v.  Dawson,  19  Mo.  App.  214;  Porter  v. 
Munger,  22  Vt.  191. 


10  INTKKKST. 

fidin  the  dat«^  of  the  verdict,  and  iiuludcd  in  \\u'  jiid^iiifiil,  if  allowed 
liy  tlic  statulcs  of  lliat  statt'.^^ 

Li luidated  and  Unl i  1^1 1  dated  Damag^ft. 

"The  jroneral  ndo  is  that,  whenever  the  deblor  knows  wliat  ho  is  to 
pay  and  when  he  is  to  pay  it,  he  shall  be  charj-vd  with  interest  if  he 
ne«;leets  to  pay."  °° 

///  actiomfoi'  hirach  of  a  contra<f,  Avherc  the  (lamajjfes  are  iinli(ini- 
dated,  interest  is  not  to  be  allowed  upon  the  dania<;es.  unless  they  are 
such  as  might  be  easily  ascertained  and  computed,  at  the  time  of  the 
breach,  from  facts  which  are  then  known  to  exist." 

Liqutdatcd  Damag>'i<. 

\Vhere  the  amount  involved  is  liquidated,  interest  begins  to  run  as 
soon  as  it  is  payable,  either  from  a  time  stipulated  for  payment,  or 
from  demand,  or  from  the  time  of  suit,  brought,  according  to  the  terms 
of  the  contract  and  the  circumstances  of  the  given  case.=^ 

JJamagi'M  (  Vipahle  of  Liquidation . 

The  same  principle  is  applicable  where  the  damages,  though  not 
actually  liquidated,  are,  at  the  time  of  breach,  and  from  facts  then 
known,  easily  ascertainable.^** 

86  Massachusetts  Ben.  Ass'n  v.  Miles.  137  U.  S.  891,  11  Sup.  Ct.  284. 

06  reople  V.  New  York  Co.,  5  Cow.  (N.  Y.)  331;  Curtis  v.  Inuerarity,  0  How. 
146;  Whitworth  v.  Hart,  22  Ala.  343;  Peoria  Marine  &  Fire  Ins.  Co.  v.  Lewis.  IS 
111.  rM3;  Clark  v.  Button,  69  111.  o21;  Stern  v.  People,  102  111.  540;  Hall  v. 
Iluckins,  41  Me.  574;  Newson's  Adm'r  v.  Douglass,  7  Har.  &  ,T.  (Md.)  417; 
Judd  V.  Dike,  30  Minn.  380,  15  N.  W.  672;  Buzzell  v.  Snoll,  25  N.  H.  474;  Stuart 
V.  Binsse,  10  Bosw.  (X.  Y.)  430;  Gutta  Percha  &  Kubber  Mfg.  Co.  v.  Benedict, 
37  N.  Y.  Super.  Ct.  430;  Spencer  v.  Pierce.  5  R.  I.  03;  Hauxhurst  v.  Hovey. 
26  Vt.  544;  Footo  v.  Blancliard.  6  Alien  (Mass.)  221.  Interest  is  recoverable 
on  legacies  from  the  time  when  they  should  have  been  paid.  Custis  v.  Adkins, 
1  Houst.  (Del.)  382;  Hennion's  Ex'rs  v.  Jacobus,  27  X.  J.  Kq.  28;  Vermont 
State  Baptist  Convention  v.  Ladd,  58  Vt.  95,  4  Atl.  634. 

s-  fJray  v.  Railroad  Co.  (X.  Y.  App.)  52  N.  E.  .5.55;  Sloan  v.  Baird.  12  App. 
Div.  486,  42  X.  Y.  Supp.  38;  Mansfield  v.  Railroad  Co..  114  X.  Y.  .'..'.l.  21  \.  E. 
7:55.  10.37;   McMaster  v.  State,  108  X.  Y.  542.  15  X.  E.  417. 

•'.8  Lawrence  v.  Church,  128  N.  Y.  324.  .332,  28  X.  H  4iKt:  M.n.l  v.  Wh.M'ler. 
13  X.  H.  351.  But  see  Yellow  Pine  Liunber  Co.  v.  Carroll.  70  Tex.  135,  13 
S.   W.   201. 

sf  .McM.ilioii  V.  Kailroad  Co..  20  X.  Y.  40;?;  Mansfield  v.  Railroad  Co.,  114  N. 
Y.  3:n,  21  .\.  E.  7;t5,  l(i.".7:  Siitpcrly  v.  Stewart.  .50  Barb.  (X.  Y.)  62;  Smith 
V.  Velie,  00  X.  Y.  106.      lu  an  action  for  breach  of  a  contract  to  deliver  property 


WHK.N     INTKKKST     IS    A  I,I,()\Vi;j).  1  1 

Tims,  in  Van  Renssclaor  v.  Jc\v<MJ,""  the  jutioii  \v;is  for  rent  payabl*- 
in  specific  articles,  willi  no  sum  mentioned;  ;in<l  in  l);iiia  v.  I-'icdlcr  "^ 
llic  nclion  was  for  tlio  recovery  of  (laniaj,^<'s  for  nondelivery  of  a  quan- 
tity of  madder  pursuant  to  contract,  the  value  of  which  could  be  ascer- 
tained by  reference  to  market  values;  and  in  both  cases  interest  was 
allowed. 

Uiiltqw) dated  Damages. 

In  MclMaster  v.  State "-  the  claim  w\as  for  damajjes  founded  ujton  a 
breach  of  contract  for  the  supply  of  nuderials  for  and  services  in  the 
construction  of  a  public  buildinj^-.  The  damages  resulted  from  the  re- 
fusal of  the  state  to  permit  the  contractor  to  proceed  with  the  work  to 
its  completion,  as  provided  by  the  contract,  and  such  danmges  con- 
sisted of  a  loss  of  profits  which  would  have  been  realized  by  performance 
of  the  work  at  the  contract  price.  The  court  held  that  interest  was 
not  allow'able,  even  from  the  time  of  the  commencement  of  the  action 
or  proceeding,  because  the  claim  was  unliquidated,  and  "there  was  no 
possible  way  for  the  state  to  adjust  the  same  and  ascertain  the  amount 
which  it  w^as  liable  to  pay."  White  v.  Miller  *^"  was  an  action  to  re- 
co\er  damages  for  breach  of  warranty  upon  sale  of  a  quantity  of  cab- 
bage seed.  The  referee,  upon  the  first  trial,  allowed  interest  upon  the 
damages  from  the  time  the  crop  would  have  been  harvested.  The 
court  held  that  was  error,  because  ''the  demand  was  unliquidated,  and 

at  a  ceitaln  time,  interest  is  recoverable  on  the  value  of  the  property  from  that 
time.  Pujol  v.  McKinlay,  42  Cal.  5,59;  Bickell  v.  Colton,  41  Miss.  3(38;  Bick- 
uall  V.  Waterman,  5  K.  I.  43:  Merrymau  v.  Griddle,  4  Munf.  (Va.)  542;  Euders 
V.  Board,  1  Grat.  (Va.)  364,  390;  Yau  Rensselaer  v.  Jewett,  5  Denio  (N.  Y.) 
135,  2  N.  Y.  135;  Van  Rensselaer  v.  .Jones.  2  Barb.  (N.  Y.)  643;  Livingston  v. 
Miller.  11  N.  Y.  80;  McKenney  v.  Haines.  63  Me.  74;  Savannah  &  C.  R.  Co. 
V.  Callahan,  56  Ga.  331;  Inhabitants  of  Canton  v.  Smith,  65  Me.  203-209. 
Contra,  Dobenspeck  v.  Armel,  11  Ind.  31.  Where  the  goods  have  not  been  paid 
for,  interest  is  recoverable  on  the  difference  between  the  contract  and  the 
market  price.  Dana  v.  Fiedler,  12  N.  Y.  40;  Cease  v.  Cockle,  76  111.  484;  Drig- 
gers  v.  Bell,  94  111.  223;  Thomas  v.  Wells,  140  Mass.  517,  5  N.  E.  485;  Clark 
v.  Dales,  20  Barb.  (N.  Y.)  42;  Hamilton  v.  Ganyard.  34  Barb.  (N.  Y.)  204; 
Fishell  V.  Winans,  38  Barb.  (N.  Y.)  228;  Currie  v.  White,  6  Abb.  Prac.  N.  S. 
(X.  Y.)  3.52.  385. 

60  2  N.  Y.  135. 

61  12  N.  Y.  40. 

62  108  N.  Y.  .542.  15  X.  E.  417. 

63  71  N.  Y.  118,  78  X.  Y.  393. 


12  INTEREST. 

that  the  amount  could  not  be  determined  by  computation  simply,  or 
reference  to  market  values."  On  the  second  trial  the  plaintiifs  were 
allowed  to  recover  interest  upon  the  amount  of  damages  from  the  time 
of  the  commencement  of  the  action.  This  was  held  to  be  error,  for, 
even  when  the  action  was  begun,  "the  claim  is  no  less  unliquidated, 
contested,  and  uncertain."  ®* 

Where  an  action  is  brought  by  an  employ^,  pending  the  term  of  em- 
ployment fixed  by  the  contract,  for  a  breach  thereof  by  the  employer 
in  discharging  him,  the  damages  are  necessarily  unliquidated,  and  in- 
terest cannot  be  allowed  either  from  demand  or  the  commencement 
of  the  action.^* 

Actions  for  a  tort  are,  in  respect  to  an  allowance  of  interest,  di- 
vided into  three  classes: 

(a)  "There  is  a  class  of  cases  sounding  in  tort,  in  which  interest  is 
not  allowable  at  all ;  such  as  assault  and  battery,  slander,  libel,  seduc- 
tion, false  imprisonment,"  etc.^*  And  interest  is  not  allowed  in  anj 
case  on  exemplary  damages; '''  nor  where  the  damages  caused  by  a 
tort  are  not  only  unascertained,  but  unascertainable,  save  by  the  en- 
lightened conscience  of  a  jury,  interest  cannot  be  recovered."* 

(b)  "There  is  another  class  in  which  the  law  gives  interest  on  the 
loss  as  a  part  of  the  damages,  such  as  trover,  trespass,  replevin,"  etc.®" 
In  an  action  against  a  common  carrier  for  the  loss  of  goods,  interest  is 
allowed  on  their  value. '^'^  "In  an  action  for  destroying  or  carrying  off 
property,  the  plaintiff  recovers  interest  from  the  time  of  the  wrongful 

64  See,  also,  Gray  v.  Railroad  Co.   (N.  Y.  App.)  o2  N.  E.  555. 

6  5  Crawford  v.  Publisbing  Co.,  22  App.  Div.  54,  56,  47  X.  Y.  Supp.  747. 

66  Wilson  V.  City  of  Troy,  185  N.  Y.  96,  105,  32  N.  E.  44;  Louisville  &  N.  R. 
Co.  V.  Wallace,  91  Tenn.  35,  17  S.  W.  882. 

eT  Ratteree  v.  Cbapman,  79  Ga.  574,  4  S.  E.  684. 

68  Western  &  A.  E.  Co.  v.  Y'oung,  81  Ga.  397,  7  S.  E.  912;  Pittsburgla  S. 
Ry.  Co.  V.  Taylor,  104  Pa.  St.  306. 

69  Wilson  V.  City  of  Troy,  135  N.  Y.  96,  105,  32  N.  E.  44;  Ekins  v.  East 
India  Co.,  1  P.  Wms.  395;  Hamer  v.  Hathaway,  33  Cal.  117;  Clark  v.  Whitakor, 
19  Conn.  320;  Tuller  v.  Carter,  59  Ga.  395;  Hayden  v.  Bartlett,  35  Me.  203; 
Negus  V.  Simpson,  99  Mass.  388. 

7  0  Mobile  &  M.  Ry.  Co.  v.  Jurey,  111  U.  S.  584,  4  Sup.  Ct.  566;  Parrott  v. 
Railroad  Co.,  47  Conn.  575;  Mote  v.  Railroad  Co.,  27  Iowa,  22;  McCorniick  v. 
Railroad  Co.,  49  N.  Y.  303. 


WHEN    INTEREST    IS    ALLOWED.  13 

act."  '^  In  actions  of  replevin,  where  the  prevailing  party  recovers, 
not  the  property  itself,  but  its  value,  interest  is  allowed  from  the  time 
the  property  was  taken. '^^  Damages  for  detention  and  interest  can- 
not both  be  recovered.^ ^  Some  courts  allow  interest  in  cases  of  negh- 
gence  as  a  matter  of  law,''*  while  others  leave  it  to  the  discretion  of  the 
jury.'''* 

(c)  There  is  "still  a  third  class  in  which  interest  cannot  be  recovered 
as  of  right,  but  may  be  allowed  in  the  discretion  of  the  jury,  according 
to  the  circumstances  of  the  case" ;  as,  for  example,  where  the  value  of 
property  is  diminished  by  an  injury  wrongfully  inflicted.'" 

The  foregoing  classification  is  based  in  part  upon  historical  reasons 
and  in  part  upon  a  tendency  of  courts  in  modern  times  to  extend  the 
right  to  recover  interest  on  demand  far  beyond  the  limits  within  which 
that  right  was  originally  confined.  "What  seemed  to  be  the  demands 
of  justice  did  not  permit  the  [original]  principle  to  remain  stationary, 
and  hence  it  has  been  for  years  in  a  state  of  constant  evolution.  This, 
in  some  measure,  accounts  for  many  of  the  apparently  contradictory 
views  to  be  found  in  the  adjudged  cases."  ''"' 

Accordingly,  it  will  be  found  that  in  some  states  interest  which 
would  be  allowable  under  the  principles  above  stated  cannot  be  recov- 
ered. When  the  matter  appears  to  have  been  regulated  by  a  state 
statute,  and  the  statute  has  been  interpreted  by  its  highest  court,  the 
regulation  of  the  statute  will  be  followed  in  the  courts  of  the  United 
States.'" 

71 1  Sedg.  Meas.  Dam.  §  316;   Fail's  Adm'r  v.  Presley's  Adm'r,  50  Ala.  342. 

72Yelton  V.  Slinkard,  85  Ind.  190;  Blackie  v.  Cooney,  8  Nev.  41;  Brizee  v. 
Maybee,  21  Wend.  (N.  Y.)  144;  McDonald  v.  Scaife,  11  Pa.  St.  381;  Bigelow 
V.  Doolittle,  36  Wis.  115. 

7  3  McCarty  v.  Quimby,  12  Kan.  494. 

74  PaiTott  V.  Ice  Co.,  46  N.  Y.  361,  369;  Alabama  G.  S.  R.  Co.  v.  McAlpine, 
75  Ala.  113;   Arthur  v.  Railway  Co.,  61  Iowa,  618,  17  N.  W.  24. 

7  5  Western  &  A.  R.  Co.  v.  McCauley,  68  Ga.  818;  Chicago  &  N.  W.  Ry.  Co. 
V.  Shultz,  55  111.  421;   Frazer  v.  Cai^et  Co.,  141  Mass.  126,  4  N.  E.  620. 

7  6  AYilson  V.  City  of  Ti-oy,  135  N.  Y.  96,  105,  32  N.  E.  44;  1  Sedg.  Meas.  Dam. 
§§  317,  320;  Mairs  v.  Association,  89  N.  Y.  498;  Pennsylvania  S.  V.  R.  Co.  v. 
Ziemer,  124  Pa.  St.  560,  17  Atl.  187;  Moore  v.  Railroad  Co.,  126  N.  Y.  671,  673, 
27  N.  E.  791;  Greenfield  Sav.  Bank  v.  Simons,  133  Mass.  415. 

7  7  Wilson  V.  City  of  Troy,  135  N.  Y.  96,  103,  32  N.  E.  44. 

7  8  New  York,  L.  E.  &  W.  R.  Co.  v.  Estill,  147  U.  S.  619,  13  Sup.  Ct.  444; 
Kimes  v.  Railway  Co.,  85  Mo.  611;  State  v.  Harrington,  44  Mo.  App.  297; 
Lincoln  v.  Claflin.  7  Wall.  132,  139. 


14  liNTKHKs^T. 

3.  INTEREST  FROM  DEMAND  OR  SUIT. 

In  an  action  for  breach  of  a  contract,  if  the  amount  is,  by  the  terms 
of  the  contract  and  the  nature  of  the  given  circumstances,  liquidated. 
or  capable  of  being  ascertained,  and  is  then  due  and  payable  without 
demand,  interest  begins  to  accrue  at  once,  except  in  jurisdictions 
where,  as  already  stated,  interest  is  not  allowed,  unless  the  contract  so 
provides,  between  default  and  judgment.^ »  The  same  result  follows 
where  interest  is  allowed  as  compensation,  and  not  as  damages.^" 
But  if,  by  the  express  or  implied  terms  of  the  contract,  the  principal 
sum  is  not  to  become  payable  until  demand,— as,  for  example,  in  the 
case  of  a  deposit,— then,  until  such  denumd,  there  can  be  no  default, 
and  therefore  no  interest  can  be  allowed  as  damages  until  demand  is 
made.'^ 

But  it  is  sometimes  provided  by  statute  that  where  a  right  exists,  but 
a  demand  is  necessary  to  entitle  a  person  to  maintain  an  action,  the 
time  within  which  the  action  must  be  commenced  must  be  computed 
(with  certain  exceptions)  from  the  time  when  the  right  to  make  the 
demand  is  complete.*^ 

TS'here  demand  is  necessary  .to  establish  a  conversion,  interest  is  re- 
coverable only  from  demand.^^ 

If  goods  withheld  are  returned,  and  damages  are  allowed  for  injury 
and  depreciation,  and  no  conversion  is  alleged,  no  interest  can  be  al- 
lowed for  the  period  of  detention-^"^ 

In  New  York  it  has  been  held  that,  where  rents  have  been  paid 
quarterly,    the   interest    should   be    computed    quarterly.*'     But    the 

7  9  Lawrence  v.  Church,  128  N.  Y.  ^24,  28  X.  E.  491);  Mead  v.  Wheeler,  13 
N.  H.  351. 

80  Devlin  v.  City  of  New  York,  131  N.  Y.  123,  30  N.  B.  45. 

81  Sheldon  v.  Heaton.  88  Hun,  535,  34  N.  Y.  Supp.  85G;  Whitcomb  v.  Harris, 
90  Mo.  206,  38  Atl.  138;  Irlbacker  v.  Roth,  25  App.  Div.  290,  49  N.  Y'.  Siipp. 
538;  Bell  v.  Rice,  50  Neb.  547,  70  N.  W.  25;  Zautcke  v.  Town-Site  Co.,  95  Wis. 
21,  69  N.  W.  978. 

82  Code  Civ.  Proc.  N.  Y.  §  410;    Mc.Midlen  v.  Rafferty,  89  N.  Y.  456. 

83  Garrard  v.  Dawson,  49  (ia.  434;  Northern  Transp.  Co.  of  Ohio  v.  Sellick, 
52  111.  249;  Johnson  v.  Sumner,  1  Mete.  (Mass.)  172;  Schwerin  v.  McKie,  51  N. 
Y.  180. 

84  Wilson  V.  Sullivan  (Utah)  53  Rac.  994. 

8  5  Jackson  v.  Wood,  24  Wend.  443. 


'  INTEREST    I'ROM    DEMAND   OR    SUIT.  1-^ 

Massachusetts  courts  have  held  otherwise.'®  And.  if  llic  amount  re- 
coverable is  wholly  unliquidated,  and  cannot  be  ascertained  until  ver- 
dict or  judgment,  interest  can  usually  be  recovered  only  from  lliat 
time,  and  not  from  demand;®^  though  a  claim  for  compensation  for 
services,  resting  solely  on  quantum  meruit,  the  amount  being  wholly 
uncertain,  carries  interest  from  a  demand  for  a  specific  amount  claimed 
as  due,  for  then  the  defendant  is  in  default. ^^ 

Where  the  plaintiff  has  made  a  reasonable  demand  for  an  accounting, 
and  defendant  fails  to  accede  to  it,  or  to  pay  the  amount  which  would 
have  been  found  due,  he  is  in  default  from  the  date  of  demand,  and 
chargeable  with  interest.^'' 

A  demand  for  a  sum  assumed  to  be  due  may  be  considered  a  sufficient 
demand  for  a  settlement,  if  the  sum  is  a  reasonable  one.^° 

In  a  case  where  the  claim  is  such  as  not  to  draw  interest  from  an 
earlier  date,  interest  can  be  allowed  from  the  commencement  of  an 
action  only  when  the  claim  is  such  that  the  interest  could  be  set  run- 
ning by  a  demand;  the  commencing  of  the  action  in  such  a  case  being 
a  sufficient  demand. ^^ 

Where  defendant  reduces  plaintiff's  recovery  by  a  recoupment,  the 
demands  on  both  sides  are  unliquidated,  and  interest  on  the  balance  is 
usually  allowed  only  from  verdict.''^ 

8  6  Hoclgkins  v.  Price,  141  Mass.  1U2,  ~j  N.  E.  002. 

87  Day  V.  Railroad  Co.,  22  Hun  (N.  Y.)  412;  Crawford  v.  Publishing  Co.,  22 
App.  Div.  54,  47  N.  Y.  Supp.  747.  Compare  Kuliu  v.  McKaj-  (Wyo.)  51  Pac. 
205;    Vietti  v.  Nesbitt,  22  Nev.  390,  41  Pac.  151. 

8s  Carricarti  v.  Blanco,  121  N.  Y.  2.30,  24  X.  E.  284.  Compare  White  v. 
Miller,  78  N.  Y.  393,  395,  et  seq.,  and  the  cases  there  reviewed. 

89  Gray  v.  Van  Amringe,  2  Watts  &  S.  (Pa.)  128. 

90  Adams  v.  Bank,  36  N.  Y.  2.55;  Mygatt  v.  Wilcox,  45  N,  Y.  30G;  Hand  v. 
Church.  39  Hun  (N.  Y.)  303.  Contra,  People  v.  Supervisors  of  Delaw^are,  9 
Abb.  Prac.  N.  S.  (N.  Y.)  408.  A  demand  for  an  unreasonably  large  sum  will 
not  put  defendant  in  default.  Goff  v.  Inhabitants,  2  Gush.  (Mass.)  475;  Ship- 
man  V.  State,  44  Wis.  458. 

91  White  V.  Miller,  78  N.  Y.  393,  398;  Crawford  v.  Publishing  Co.,  22  App. 
Div.  54,  47  N.  Y.  Supp.  747;  I'atterson  v.  Glass  Co.,  72  Mo.  App.  492.  Com- 
pare Goddard  v.  Foster,  17  Wall.  123;  Mercer  v.  Vose,  67  N.  Y.  56;  Hand  v. 
Church,  39  Hun  (N.  Y.)  303;   Gammon  v.  Abrams,  53  Wis.  323,  10  N.  W.  479. 

92  Brady  v.  Wilcoxson,  44  Cal.  239;  Still  v.  Hall,  20  Wend.  (N.  Y.)  51;  Mc- 
Master  v.  State,  108  N.  Y.  542,  15  N.  E.  417. 


IG  INTEREST. 


4.  COMPOUND  INTEREST. 

Interest  computed  upon  interest  is  called  "compound  interest."  It 
is  not  favored  in  the  law,  and  it  is  a  general  rule  that  compound  in- 
terest cannot  be  recovered.®' 

There  are,  however,  a  number  of  exceptions  to  this  general  rule. 
Compound  interest  can  usually  be  recovered  only  upon  some  new  and 
independent  agreement,  made  upon  a  good  consideration.  The  right 
to  retain  it  when  voluntarily  paid  is  not  disputed,  and  a  recovery  of  it 
upon  express  contract,  made  after  the  interest  has  accrued,  upon  a 
sufficient  consideration,  is  allowed.  But  a  provision  that  future  inter- 
est, if  not  paid,  shall  be  taken  as  principal,  and  bear  interest,  is  void.^* 

Engagements  to  pay  interest  in  future  upon  interest  already  accrued 
have  a  consideration  in  forbearing  and  giving  day  of  pajTuent  for 
moneys  presently  due.  But  a  like  promise,  to  operate  not  only  in 
future,  but  also  retrospectively,  unsupported  by  any  consideration  (if 
one  exists)  other  than  the  moral  consideration  resulting  from  the 
fact  that  the  interest  is  in  arrear  and  unpaid,  is  invalid.*'^  But,  if 
there  is  other  sufficient  consideration,  such  a  retrospective  agreement 
is  valid.^* 

"Compound  interest  is  recoverable  upon  merchants'  accounts  of 
mutual  dealings,  upon  an  express  agreement,  or  when  an  agreement 
may  be  implied  from  usage  or  custom,  for  the  reason  that  an  extension 
of  time  for  payment  is  implied,  and  the  transaction  is  fair,  as  the  bal- 
ance may  change,  and  the  benefit  of  the  usage  be  mutual."  ^^ 

03  Mason  v.  Callender,  2  Miim.  350  (Gil.  302);  State  v.  Jacksou,  1  Johns.  Ch. 
(N.  Y.)  13;  Whitcomb  v.  Harris,  90  Me.  2(Xi,  38  Atl.  138;  Danioll  v.  Sinclair, 
0  App.  Cas.  181. 

»4  Young  V.  Hill,  G7  N.  Y.  162;  Bowman  v.  Necly,  151  111.  37,  37  N.  E.  840; 
Lord  Ossulston  v.  Lord  Yarmouth,  2  Salk.  449;  Ex  parte  Bevan,  9  Ves.  223; 
Guernsey  v.  Rexford,  03  N.  Y.  G31;  Grimes  v.  Blake,  16  Ind.  160;  Doe  v.  War- 
ren, 7  Me.  48;   Thayer  v.  Mining  Co.,  105  111.  540. 

OB  Young  V.  Hill,  67  N.  Y.  162;  Ehle  v.  Judson,  24  Wend.  (N.  Y.)  96;  Van 
I'.cnschooten  v.  Lawson,  6  Johns.  Ch.  (N.  Y.)  313.  Compare  Stewart  v.  Tetree, 
55  N.  Y.  621;   Rose  v.  City  of  Bridgeport,  17  Conn.  243,  247. 

ae  Tillotson  v.  Nye,  88  Hun,  101,  34  N.  Y.  Supp.  606. 

0-  Kelly,  Usury,  49;  Young  v.  Hill,  07  N.  Y.  167,  171;  Lord  Clanoarty  v. 
Liifouche,  1  Ball  &  B.  429;  Von  Ilemert  v.  Torter,  11  Mete.  (Mass.)  210; 
Cyrpenter  v.  Welch,  40  Vt.  251. 


I'AHTIAI.     PAY.MK.NTS MKTHOI)    OK    COMPUTATION.  17 

But  tho  law  Mill  not  imply  a  pioiiiiso  to  pay  compound  intorfst, 
except  nnder  peculiar  circumstances  and  upon  some  evidence  fiom 
which  an  ayrecnient  to  turn  the  interest  into  principal  to  bear  inter- 
est for  the  future  can  be  inferred.** 

Other  exceptions  to  the  rule  against  the  allowance  of  interest  on 
interest  are  found  in  the  case  of  coupons  (under  certain  circumstances; 
or,  in  some  states,  in  all  cases),  as  already  stated;  and  where  com- 
pound interest  is  allowed  as  a  i)unisliment  for  a  fraudulent  breach  of 
trust,  or  other  ^ross  or  willful  wronj;.^" 

Compound  interest  is  nev'er  allowed  by  way  of  damages.^""     But 

where,  by  the  terms  of  a  contract,  interest  is  due  at  a  fixed  day,  it  is  a 

debt;  and,  if  not  paid  when  due,  interest  thereon  may  be  recovered  as 

damages.^"^     This  secondary  interest  does  not,  in  turn,  bear  inter- 
est.^»2 

5.  PARTIAL   PAYMENTS— METHOD  OF  COMPUTATION. 

The  rule  for  casting  interest  when  partial  payments  have  been  made 
is  to  apply  the  payment,  in  the  first  place,  to  the  discharge  of  the  inter- 
est then  due.  If  the  payment  exceeds  the  interest,  the  surplus  goes 
towards  discharging  the  principal,  and  the  subsequent  interest  is  to  be 
computed  on  the  balance  of  principal  I'emaining  due.  If  the  payment 
be  less  than  the  interest,  the  surplus  of  interest  must  not  be  taken  to 
augment  the  principal;  but  interest  continues  on  the  former  principal 

»8  Young  V.  Hill.  (57  N.  Y.  162.  172. 

99  Ackerman  v.  Emott,  4  Barb.  (N.  Y.)  626;  Merrifield  v.  Longmire,  66  Cal. 
180,  4  Pac.  1176;  State  v.  Howarth,  48  Conn.  207;  Jennison  v.  Hapgood,  10 
rick.  (Mass.)  77. 

100  Lewis  V.  Small,  75  Me.  323. 

101  Calhoun  v.  Marshall,  61  Ga.  275;  Mann  v.  Cross,  9  Iowa,  327;  Taliafer- 
ro's Ex'rs  Y.  King's  Adm'r,  9  Dana  (Ky.)  331;  Peirce  v.  Rowe.  1  N.  H.  179; 
Bledsoe  v.  Nixon.  69  N.  C.  89;  Lauahan  v.  Ward,  10  R.  I.  299;  Catlin  v.  Lyman, 
16  Vt  44  (contra,  Broughton  v.  Mitchell,  64  Ala.  210);  Rose  v.  City  of  Bridge- 
port, 17  Conn.  243;  Leonard  v.  Villars'  Adm'r,  23  111.  377;  Banks  v.  McClellan, 
24  Md.  62  (contra,  Fitzhiigh  v.  McPherson,  3  Gill  [Md.]  408):  Hastings  v.  Wis- 
wall,  8  Mass.  455:  Corrigan  t.  Falls  Co.,  5  X.  J.  Eq.  232,  245;  Young  v.  Hill, 
67  N.  Y.  162  (contra,  Howard  v.  Farley.  3  Rob.  [N.  Y.]  599);  Stokely  v.  Thomp- 
son, 34  Pa.  St.  210. 

102  wheaton  v.  Pike,  9  R.  L  132:  Vaughan  v.  Kennan,  38  Ark.  114;  Bow- 
man V.  Neely,  151  111.  37,  37  N.  E.  840. 

INT.&U.— 2 


18  INTEREST. 

until  the  period  when  the  payments,  taken  together,  exceed  the  inter- 
est due,  and  then  the  surplus  is  to  be  applied  towards  discharging  the 
priuc-ipal;  and  interest  is  to  be  computed  on  the  balance,  as  afore- 
said.^*'^ 

6.  ACTION  FOR  INTEREST  ONLY. 

Where  interest  is  recoverable  as  damages,  it  does  not  form  the  basis 
of  an  action,  but  is  an  incident  to  the  recovery  of  the  principal  debt. 
A.nd  therefore,  if  the  principal  sum  has  been  paid,  so  that,  as  to  it,  an 
action  brought  cannot  be  maintained,  the  opportunity  to  acquire  a 
right  to  damages  is  lost.  This  principle  applies,  for  example,  where 
one  who  has  illegally  been  required  to  pay  a  tax  receives  back  and  ac- 
cepts the  amount  thus  paid  from  the  government,  without  protest. 
He  cannot  thereafter  recover  interest  thereon  as  damages.^"* 

\^'here  interest  is  secured  by  contract,  or  is  allowed,  not  as  damages, 
but  as  part  of  the  compensation, — for  example,  for  property  taken  for 
public  purposes, — an  action  may  be  maintained  for  it,  although  the 
principal  has  been  paid.* 

And  where  both  principal  and  interest  are  due  and  payable,  the  mere 
fact  that  the  debtor  pays,  and  the  creditor  receives,  a  sum  equal  to  the 
principal  only,  does  not  prevent  the  creditor  from  suing  the  debtor  for 
the  unpaid  balance,  for  by  itself  alone  it  does  not  justify  an  inference 
of  acceptance  in  full  satisfaction.^''^    If,  in  such  a  case,  the  payments 

103  Couuecticut  v.  Jackson,  1  Johns.  Ch.  (N.  Y.)  13,  17;  Peyser  v.  Myers,  135 
N.  Y.  599,  607,  32  N.  E.  699. 

104  Stewart  v.  Barnes,  l.">3  U.  S.  462,  14  Sup.  Ct.  849;  also,  Pacific  R.  Co.  v. 
U.  S.,  158  U.  S.  118,  15  Sup.  Ct.  766;  Moore  v.  Fuller,  47  N.  C.  205;  Tillotson  v. 
Preston,  3  Johns.  (N.  Y.)  229;  Dixon  v.  Parkes,  1  Esp.  110;  Churcher  v.  Stringer,  2 
Barn.  &  Adol.  777;  Cutter  v.  Mayor,  etc.,  92  N.  Y.  166;  Hamilton  v.  Van 
Rensselaer,  43  N.  Y.  244;  Hayes  v.  Railway  Co.,  64  Iowa,  753,  19  N.  W.  245; 
Southern  Cent  R.  Co.  v.  Town  of  Moravia.  61  Barb.  (N.  Y.)  181;  Couseqiia  v. 
Fanning,  3  Johns.  Ch.  (N.  Y.)  ;i64;  Gillespie  v.  Mayor,  etc.,  3  Edw.  Ch.  (N.  Y.) 
512;  .Taeot  v.  Emmett,  11  Paige  (N.  Y.)  142;  Succession  of  Mann,  4  La.  Ann. 
28;  Succession  of  Anderson,  12  La.  Ann.  95;  American  Bible  Soe.  v.  Wells,  68 
Me.  572;    Tenth  Nat.  Bank  v.  ALiyor,  etc.,  4  Hun  (N.  Y.)  429. 

♦  Robbins  v.  Cheek,  32  Ind.  328;  Stone  v.  Bennett,  8  Mo.  41;  Fake  v.  Eddy's 
Ex'r,  15  Wend.  (N.  Y.)  76;  King  v.  Phillips.  95  N.  C.  245;  Devlin  v.  City  of 
New  York,  131  N.  Y.  123,  30  N.  E.  45;  Smitli  v.  City  of  Buffalo  (Sup.)  39  N. 
Y.  Supp.  881. 

i"&  People  v.  New  York  Co.,  5  Cow.  (N.  Y.)  331. 


LIABILITY    Ob'    TKUSTEIO    FOR    INTEREST.  19 

are  made  generally  on  account,  interest  is  first  extinguished  thereby, 
and  accordingly  the  unsatisfied  balance,  even  though  exactly  equaling 
the  interest,  may  be  sued  for  as  principal.^"® 

7.  LIABILITY  OF  TRUSTEE  FOR  INTEREST. 

If  a  trustee  holds  funds  which  can  and  should  be  invested,  and 
through  fraud,  or  mismanagement,  or  other  breach  of  trust  he  does  not 
invest  them,  or  invests  them  in  his  own  business,  or  that  of  others,  or 
in  commercial  or  manufacturing  enterprises,  or  speculative  ventures, 
he  will  be  charged  with  interest,  as  a  general  rule;  ^°^  or,  at  the  option 
of  the  beneficiary,  with  the  profits  earned.^ "^  But  the  beneficiary 
cannot  have  rests  at  selected  periods,  so  as  to  claim  profits  when  they 
exceeded  interest,  and  interest  when  it  exceeded  profits.  If  profits  have 
first  exceeded  interest,  and  then  there  has  been  actual  loss,  if  the  benefi- 
ciary claims  profits  he  can  only  recover  net  profits  for  the  entire 
period.^*^"  And  where  the  trustee  has  made  separate  unauthorized  in- 
vestments of  separate  parts  of  the  fund,  the  beneficiary's  right  to 
elect  applies  to  each  investment  by  itself,  so  that,  according  as  his 
interest  may  appear,  he  may  approve  some  and  accept  the  profits,  and 
reject  others  and  insist  on  legal  interest.^ ^^  And  he  may  so  elect 
even  during  the  pendency  of  the  trust,^^^  And  a  beneficiary  is  not  re- 
quired to  keep  watch  of  all  the  trustee's  acts,  so  as  to  be  prepared  at 
once  to  protest  in  case  of  improper  investments.  It  is  the  duty  of  the 
trustee,  and  not  of  the  beneficiary,  to  attend  to  the  investment  of  the 
estate.^ ^^     But  it  may  be  the  beneficiary's  duty,  if  he  proposes  to 

106  Id.  See,  also,  National  Bank  of  Commonwealth  v.  Mechanics'  Nat. 
Bank,  M  U.  S.  440. 

107  Price  V.  Holman,  135  N.  Y.  124,  32  N.  E.  124;  In  re  Barnes,  140  N.  Y. 
468,  471,  35  N.  E.  653;  Cook  v.  Lowry,  95  N.  Y.  108,  113;  Reynolds  v.  Sisson, 
78  Hun,  595,  29  N.  Y.  Supp.  492. 

108  utica  Ins.  Co.  v.  Lynch,  11  Paige  (N.  Y.)  520;  In  re  Myers,  131  N.  Y. 
409,  30  N.  E.  135;  Deobold  v.  Oppermann,  111  N.  Y.  531,  538,  19  N.  E.  94; 
King  V.  Talbot,  40  N.  Y.  76,  86;  Wilmerding  v.  McKesson,  103  N.  Y.  329,  8 
N.  E.  665. 

109  Baker  v.  Disbrow,  18  Hun  (N.  Y.)  29,  affirmed  in  79  N.  Y.  631. 

110  King  V.  Talbot,  40  N.  Y.  76,  91.  Compare  In  re  Porter's  Estate,  5  Misc. 
Rep.  274,  25  N.  Y.  Supp.  822. 

111  Gillespie  v.  Brooks,  2  Redf.  Sur,  (N.  Y.)  340,  360. 

112  In  re  Foster,  15  Hun  (N.  Y.)  387,  393. 


20  INTKRKST. 

object  to  the  trustee's  fn^lnre  to  invest  small  snnis,  to  find  nnd  call  to 
his  attention  suitable  opportunities  for  investing  the  sanie.^'  '  And 
the  mere  fact  that  the  trustvV  deposits  trust  moneys  with  his  own,  or 
uses  them  in  his  own  business,  does  not  necessarily  nMuler  him  liable 
for  interest;  as,  for  instance,  where  the  funds  are  too  small  to  make  it 
practicable  to  invest  them,  or  where  the  trustee  may  be  called  on  at 
any  moment  to  j^ay  over  the  fund  to  the  beneticiary.  In  order  to  make 
him  liable  for  interest,  there  must  be  superadded  a  breach  of  trust,  a 
nejilect  or  refusal  to  invest  the  funds  at  the  time  or  in  the  mode 
which  the  trust  instrument  or  the  law  itself  has  pointed  out.^^* 

In  a  case  where  a  trustee  has  made  use  of  the  funds,  l)ut  no  breach  of 
trust  is  involved,  he  will  be  charj^ed  with  interest,  if  it  be  proved  that 
he  has  earned  interest.""* 

If,  when  rents  and  income  are  due  and  payable,  the  lieneficiary  volun- 
tarily leaves  them  in  the  trustee's  hands,  they  do  not  draw  interest."® 

If  a  penalty  is  incurred,  owing  to  the  negligent  failure  of  the  trustee 
to  pay  taxes  when  due,  and  is  paid  by  him,  he  cannot  be  credited  there- 
with on  his  accounting.^" 

If  commissions  are  prematurely  withdrawn  by  the  trustee,  he  is 
chargeable  with  interest  thereon."'     But  not  solely  on  that  ground, 

15  3  Rapalje  v.  Norswortliy's  P^x'rs.  1  Sandf.  Cli.  (X.  Y.)  :m).  405. 

11*  Rapalje  v.  Noiswortby's  Ex'rs,  1  Saudf.  Ch.  (X.  Y.)  899,  404;  .Jaoot  v. 
Emmett,  11  Paige  (X.  Y.)  142,  145;  Price  v.  Holman.  lo5  X.  Y".  124.  133,  32 
N.  E.  12ri;  lu  re  Barnes,  140  N.  Y.  468,  35  X.  E.  (i53;  In  re  Xesmith,  140  N.  Y. 
609,  615-617,  35  N.  E.  942;  Shuttleworth  v.  Winter.  55  N.  Y.  U24.  <331;  In  re 
Clark's  Estate,  IG  Misc.  Rep.  405,  39  X.  Y.  Hnpp.  722.  As  to  whether,  in 
deciding  whether  a  trustee  had  in  his  hands  a  fund  large  enough  to  call  for  in- 
vestment thereof,  it  is  permissible  to  take  into  account  the  fact  that  he  held 
several  entirely  distinct  trust  funds,  which,  if  combined,  would  have  atforded 
such  a  gross  sum,  see  Rapalje  v.  Norsworthy's  E.x'rs,  1  Sandf.  Cli.  (X.  Y.)  399. 

115  Rapalje  v.  Xorsworthy's  Ex'rs.  1  Sandf.  Ch.  (X.  Y.)  399.  4(>4.  As  to 
liability  for  interest,  see,  also,  note  to  Kellett  v.  Rathbun,  4  Paige  iN.  Y.;  Banks' 
Ann.  Ed.)  102,  109. 

lie  Holley  v.  S.  G.,  4  Edw.  Ch.  (X.  Y.)  284.  286. 

117  Stubbs  V.  Stubbs,  4  Redf.  Sur.  (N.  Y.)  170. 

118  In  re  Peyser,  5  Dem.  Sur.  (N.  Y.)  244.  247;  Wheelwright  v.  Wheelwright, 
2  Redf.  Sur.  (N.  Y.)  501;  In  re  Freeman's  Estate,  4  Redf.  Sur.  (X.  Y.)  211,  215; 
United  States  Ti-ust  Co.  v.  Bixby,  2  Dem.  Sur.  (N.  Y.)  494.  But  see  Wyckoff 
V.  \an  Siclen,  3  Dem.  Sur.  (X.  Y.)  75. 


LIAi;iI,ITY    OK    TRUSTEK    FOR    INTKREST.  21 

if  they  had  then  been  actually  earned."^  If  commissions  which  have 
been  earned,  but  not  allowed,  are  in  good  faith  withdrawn  by  the 
trustee,  under  an  assnni])tion  that  he  is  entitled  so  to  do,  this  mere 
fact,  in  the  absence^  of  any  resulting  loss  to  the  estate,  is  not  ground 
for  charging  him  with  interest  thereon. ^^"^ 

It  is  only  in  extraordinary  cases  that  the  trustee  is  charged  with 
compound  interest.^ -^  In  King  v.  Talbot  ^^-  it  was  held  that  in  case 
of  bad  faith  or  willful  failure  of  duty,  the  highest  rate  of  interest 
should  be  imposed;  but  where,  as  in  that  case,  a  mistake  occurs  in 
investing  funds,  but  the  trustee  acted  honestl}'  and  in  good  faith,  the 
rate  of  interest  to  be  charged  rests  in  a  discretion  which  permits  the 
consideration  of  all  the  circumstances,  which  show  that  substantial 
justice  can  be  done  to  the  cestui  que  trust,  by  allowing  a  less  rate. 
Accordingly,  following  the  English  rule  in  such  cases  of  charging  4 
per  cent,  where  the  legal  rate  was  5,  the  court  charged  the  trustee  (> 
per  cent.,  the  legal  rate  in  New  York  being  then  7  per  cent.^-^  In 
Clarkson  v.  De  Feyster  ^'*  it  was  said  that  the  English  rule  of  ''equi- 
table interest '  at  1  per  cent,  less  than  the  legal  rate  has  never  been 
adopted  in  this  state.  But  the  court  in  King  v.  Talbot,  supra,  say 
that  there  is  nothing  in  Clarkson  v.  De  Peyster,  supra,  that  affects  the 
soundness  of  their  adoption  of  the  English  rule.^^^ 

In  cases  where  there  has  been  an  active  breach  of  trust,  resulting  in 
loss,  but  the  circumstances  are  not  sufficiently  aggravated  to  call  for 
compound  interest,  legal  interest  is  commonly  charged,  but  each  case 
must  depend  to  a  considerable  degree  on  its  own  circumstances,  as 

119  Beard  v.  Board,  140  N.  Y.  260,  265,  266,  35  N.  E.  488;  Price  v.  Holman, 
135  N.  Y.  124,  32  N.  E.  124;   Wliitney  v.  Phoenix.  4  Redf.  Sur.  (N.  Y.)  180,  195. 

120  Beard  v.  Beard,  140  N.  Y.  260,  266,  35  N.  E.  488. 

121  Price  v.  Holmaii,  135  N.  Y.  124,  133,  i:34,  32  N.  E.  124.  For  instances  of 
such  charges,  see  Hannahs  v.  Hannahs,  68  N.  Y.  610;  Brown  v.  Knapp,  79  N. 
Y.  136,  145;  Tucker  v.  McDermott,  2  Redf.  Sur.  (N.  Y.)  312;  Morgan  v.  Mor- 
gan, 4  Dem.  Sur.  (N.  Y.)  353,  356;  Smith  v.  Rockefeller,  3  Hun  (N.  Y.)  295; 
Reynolds  v.  Sissou,  78  Hun,  595,  598,  29  N.  Y.  Supp.  492;  Utica  Ins.  Co.  v. 
Lynch.  11  Paige,  520. 

122  40  N.  Y.  76. 

12  3  See,  also,  Shuttleworth  v.  Winter,  55  N.  Y.  624;  Haskin  v.  Teller,  3  Redf. 
Sur.  (N.  Y.)  310,  323. 

124  Hopk.   Ch.  424,  426, 

125  To  the  same  effect  appear  to  be  Wilmerding  v.  McKesson,  103  N.  Y.  329, 
341,  8  N.  E.  605;    Bruen  v.  Gillet,  115  N.  Y.  10,  21,  21  N.  E.  676. 


22  INTEREST. 

affected  by  the  dej^ree  of  wronj^doing:,  the  ])iobable  actual  loss,  the 
j,)ei'Sonal  profits,  if  any,  realized  by  the  trustee,  etc.^^^ 

Soniowliat  similar  principles  ai)ply  where  it  is  found  that  one  person 
has  been  holding  funds  belonging  to  another,  even  though  he  only 
knew  tliat  the  latter  claimed  them,  witliout  knowing  I  he  particulars  of 
The  claim.  For  if,  instead  of  setting  the  fund  apart  to  await  the  set- 
tlement of  the  dispute,  he  mingles  it  with  his  own  funds,  and  enjoys 
the  benefit  of  it,  he  is  chaigeable  \\  ith  legal  interest.^^^ 

8.  FEDERAL  JURISDICTION— AMOUNT  IN  CONTROVERSY. 

In  determining  whether  the  amount  of  a  judgment  in  an  action  in  a 
federal  court  is  suflicient  to  w  arrant  a  review  thereof  in  the  supreme 
court  in  cases  where  the  right  to  a  review  still  depends  on  the  amount 
in  controversy,  interest  accruing  before  and  included  in  the  judgment 
appealed  from  is  deemed  to  form  part  of  the  amount  in  controversy.^-^ 
But  interest  on  the  judgment  appealed  from  is  not  included  in  de- 
termining the  jurisdictional  amount.^ -° 

In  all  judgments  brought  to  the  supreme  court  for  review,  the  value 
of  the  "matter  in  dispute,"  where  that  is  still  involved,  under  present 
statutes,  is  determined  by  the  amount  due  at  the  time  of  the  judgment 
brought  there  to  be  reviewed,  namely,  the  judgment  of  the  intermedi- 
ate appellate  court,  and  not  at  the  time  of  the  judgment  of  the  trial 
court;  and  thus  the  total  amount  due  included  interest  on  the  original 
judgment,  if  it  bore  interest,  until  the  date  of  that  of  the  intermediate 
appellate  court. ^^°  And  where  in  an  action  brought  in  a  state  court, 
and  removed  to  the  federal  court,  a  judgment  is  entered  which,  in  ac- 
cordance with  the  statutes  of  the  state,  includes  interest  upon  the 
amount  of  the  verdict,  from  its  date,  until  the  entry  of  judgment,  the 

12C  Cook  V.  Lowry,  9.">  N.  Y.  lOo,  114,  and  cases  there  cited;  Morgan  t.  Mor- 
gan, 4  Dem.  Sur.  (N.  Y.)  .'353,  SuG,  and  cases  there  cited. 

127  Moors  v.  Washburn,  159  Mass.  172,  34  N.  E.  182. 

128  New  York  El.  R.  R.  v.  Fifth  Nat.  Bank,  118  U.  S.  608,  7  Sup.  Ct.  2S; 
District  of  Columbia  v.  Gannon,  130  U.  S.  227,  9  Sup.  Ct.  508;  The  Patapsco, 
12  Wall.  451;   The  Rio  Grande,  19  Wall.  78. 

120  Kuapp  V.  Banks,  2  How.  73;    W.  U.  Tel.  Co.  v.  Ro.m>rs.  03  U.  S.  565,  5G6. 

130  zeckendorf  v.  .Tohnson,  123  U.  S.  G17,  8  Sup.  Ct.  2(n ;  Keller  v.  Ashford, 
1.33  TJ.  S.  610,  10  Sup.  Ct.  494;  Benson  Mining'  &  Siiulting  Co.  v.  Alia  Mining 
&  Smelting  Co.,  145  U.  S.  428,  12  Sup.  Ct.  877. 


REMISSION    OF    INTEREST    AWARDED.  23 

total  amount  of  the  judgment  thus  composed  determines  the  question 
whether  the  amount  involved  is  sufficient  to  give  the  federal  supreme 
court  jurisdiction  to  review  it.^^^ 

9.  BEMISSION  OF  INTEREST  AWARDED. 

If  interest  is  erroneously  awarded  or  allowed,  and  is  included  in  a 
judgment,  the  appellate  court  may  allow  the  api)ellee,  if  he  wishes,  to 
remit  the  interest,  and  may,  where  that  is  the  only  reversible  error, 
affirm  the  judgment  appealed  from,  upon  condition  that  such  remission 
be  made."^ 

131  Massachusetts  Ben.  Assn  v.  Miles,  137  U.  S.  689,  11  Sup.  Ct.  234.  See, 
also,  U.  S.  Sup.  Ct.  Rule  23  (137  TJ.  S.  691,  692,  3  Sup.  Ct.  xiii.);  Baltimore  & 
O.  R.  Co.  V.  Griffith,  159  U.  S.  605,  16  Sup.  Ct.  105. 

132  Washington  &  G.  R.  Co.  v.  Harmon's  Adm'r,  147  U.  S.  571,  13  Sup.  Ct. 
557;  Upham  v.  Dickinson,  50  111.  97;  AVhitehead  v.  Kennedy,  69  N.  Y.  462; 
Town  of  Union  v.  Durkes,  38  N.  J.  Law,  21.  Compare  dissenting  opinions  in 
Burdict  v.  Railway  Co.,  123  Mo.  221,  27  S.  W.  453;  and  see  Suth.  Dam.  §  460; 
Carlisle  v.  Callahan,  78  Ga.  320,  2  S.  E.  751. 


24  usuRif. 


USURY. 


10.  USURY  DEFINED. 

Wliere  money  or  property  is  exacted  or  reserved  l>y  ajxreeraent  for 
the  loan  or  forbearance  of  money  in  excess  of  the  h'Ral  rate  of  interest 
fixed  by  statute,  the  agreement  is  usurious,  and  tlie  money  or  property 
thus  exacted  or  reserved  in  excess  is  termed  usury.  The  latter  term 
is  also  applied  to  the  act  of  loaning  money  at  a  usurious  rate. 

11.  USURIOUS  INTENT  ESSENTIAL. 

Usury  consists  in  the  corrupt  agreement  of  the  parties  by  which  more 
than  lawful  interest  is  to  be  paid.  To  constitute  usury,  there  must  be 
a  usurious  or  corrupt  intent.  When,  at  the  time  of  an  agreement  for 
a  loan,  nothing  is  said  as  to  the  rate  of  interest,  the  law  implies  it  to  be 
that  limited  by  statute.  To  increase  or  alter  it,  a  special  agreement  is 
necessary.  ^^^ 

Thus  the  accidental  inclusion  of  an  extra  sum,  neither  principal  nor 
interest,  in  the  amount  for  which  a  note  is  given,  and  where  it  is  the 
intention  of  the  parties  to  provide  for  the  payment  of  principal  and  of 
legal  interest  only,  does  not  render  the  note  usurious.  As  to  the  sur- 
plus item,  it  is  without  consideration,  but  it  is  not  usury.^^** 

The  same  principle  applies  to  mistakes  in  attempting  to  eliminate 
usury  by  recomputing  and  giving  a  new  security.* 

12.   LOAN  OR  FORBEARANCE  ESSENTIAL. 

Usury  must  be  founded  on  a  loan  or  forbearance  of  money.  If 
neither  of  these  elements  exists,  there  can  be  no  usury,  however  uncon- 
scionable the  contract  may  be."'^     Thus,  a  change  of  securities  for  an 

iss  Rosonstein  v.  Fox,  350  N.  Y.  3.j4,  3(53,  44  N.  E.  3027. 

134  Brown  v.  Baulv,  80  Iowa,  527,  53  N.  W.  410,  412;  lUisliing  v.  Willingliam 
(da.)  31  S.  E.  154. 

*  Jarvis  v.  Grocery  Co.,  03  Ark.  225,  229,  38  S.  W.  148. 

135  Mt-aker  v.  Eit-ro,  145  N.  Y.  1G5,  31)  N.  E.  714;  Elk'Ubogen  v.  Griffey,  55 
Ark.  2G8,  18  S.  W.  120. 


KOliM    OF    CONTRACT    IMMATKUIAL.  25 

existing  debt,  and  payment  of  a  sum  of  money  to  the  creditor  for  hiH 
consent  to  Uw  change,  is  not  a  loan,  and,  if  there  is  no  forbearance, 
there  is  no  nsiiry.^^^ 

13.  FORM  OF  CONTRACT  IMMATERIAL. 

In  determining  whether  a  contract  is  usurious,  the  law  looks  not  at 
the  mere  form,  but  at  the  substance.  If  there  be  in  fact  a  usurious 
loan,  no  shift  or  device  will  protect  it.^^^ 

Thus,  if  one  mortgage  his  real  estate,  and  at  the  same  time  agree 
that,  in  addition  to  the  legal  rate  of  interest,  the  mortgagee  shall  have 
the  manure  from  the  place,  there  is  usury.^^^  So,  if  an  applicant  for 
a  loan  from  an  insurance  company  is  required,  as  a  condition  of  pro- 
curing it,  to  take  out  a  policy.^ ^* 

A  sale  of  stock,  coupled  with  an  agreement  by  the  seller  to  buy  it 
back  at  the  price  paid  for  it,  with  1  per  cent,  a  month  added,  if  the 
purchaser  should  wish  to  sell,  may  be  usurious,  but  the  mere  agree- 
ment does  not  in  itself,  as  matter  of  law,  stamp  the  transaction  as 
a  scheme  or  device  to  cover  up  a  usurious  loan.^**^ 

A  seller  of  land  or  chattels  may  stipulate  for  a  larger  price  on  a 
credit  sale  than  he  would  be  willing  to  accept  in  cash,  and  the  transac- 
tion is  not  rendered  usurious  by  the  fact  that  the  credit  price  is  in  ex- 
cess of  the  cash  price  and  legal  interest  to  the  date  of  payment.^* ^ 
But  when  the  sale  is  in  fact  at  an  agreed  cash  price,  and  the  form  of  a 
sale  on  credit  is  resorted  to  for  the  purpose  of  evading  the  statute 
against  usury,  the  transaction  will  be  declared  usurious.^ *2 

13  G  Moaker  v.  Fiero,  145  N.  Y.  165,  171,  39  N.  E.  714. 

137  Scott  V.  Lloyd,  9  Pet.  446;  Phelps  v.  Bellows,  53  Vt.  539;  Meaker  v. 
Fiero,  145  N.  Y.  165,  169,  39  N.  B.  714;  Krumsieg  v.  Trust  Co.,  71  Fed.  350, 
352;  Brower  v.  Insurance  Co.,  86  Fed.  748;  Braiue  v.  Rosswog,  13  App.  Div. 
249,  42  N.  Y.  Supp.  1098;    Id..  153  N.  Y.  647,  47  N.  E.  1105. 

138  Vilas  V.  McBride,  62  Huu,  324,  17  N.  Y.  Supp.  171,  affirmed  in  136  N.  Y. 
€34.  32  N.  E.  635. 

139  Carter  v.  Insiu-ance  Co.  (N.  C.)  30  S.  E.  341;  Union  Cent.  Life  Ins.  Co. 
V.  Morrow,  7  Ohio  Dec.  118;   Hilliard  v.  Sanford,  Id.  449. 

1*0  Phillips  V.  Mason,  66  Hun,  580,  21  N.  Y.  Supp.  842. 

141  Bass  V.  Patterson,  68  Miss.  310,  313,  8  South.  849;  Hogg  v.  Ruffner.  1 
Black,  115;  Brooks  v.  Avery,  4  N.  Y.  225;  Rushing  v.  Worsham  (Ga.)  30 
S.  E.  541;  Beete  v.  Bidgood,  7  Barn.  &  C.  453:  Floyer  v.  Edwards,  1  Cowp. 
112. 

i-t2  Bass  v.  Patterson,  68  Miss.  310,  313,  8  South.  849;   Quackenbos  v.  Sayer, 


'JG  USURY. 

So,  antodatini;  a  note  for  a  loan  is  usurious,  if  with  corrupt  intent, 
but  not  otherwise. ^*^ 

14.  HISTORICAL. 

The  takinj;  of  any  interest  whatever  was,  by  the  ancient  com- 
mon law.  absolutely  luohibited.'*^  The  statute  37  Hen.  VIII.  c. 
9,  limited  the  rate  to  10  per  cent.,  and  thus  nej,^ativcly  authorized 
interest.  The  statute  12  Anne,  St.  2,  c.  IG,  reduced  the  author- 
ized rate  to  5  per  cent.,  and  provided  that  all  bonds,  contracts,  and 
assurances  whatsoever  for  payment  of  any  principal,  or  money  to  be 
lent,  or  covenanted  to  be  performed  upon  or  for  any  usury,  whereupon 
or  whereby  there  should  be  reserved  or  taken  above  the  rate  of  five 
pounds  in  the  hundred,  should  be  utterly  void,  and  that  any  person  who 
should  take  more  than  that  rate  should  forfeit  and  lose  for  every  such 
offense  the  treble  value  of  the  moneys,  wares,  merchandises,  and  other 
things  so  lent.  Various  English  statutes  establishing  different  rates 
had  been  passed  between  the  dates  of  these  two  statutes.^* ^  By 
17  &  18  Vict.  c.  00,  all  the  laws  against  usury  were  repealed,  leaving 
parties  at  liberty  to  contract  for  any  rate  of  interest.  In  the  United 
States  the  statutes  of  usury  have  been  based  on  the  statute  of  Anne^ 
but  contain  many  variations  from  its  provisions,  differing  among  them- 
selves in  the  rates  of  interest  authorized  and  in  other  respects. 

15.  THE  FEDERAL  STATUTE. 

By  the  national  currency  act  of  June  3,  1864,^*"  it  is  provided  that 
national  banks  may  loan  money  at  the  rate  in  force,  in  the  states 
where  they  are  respectively  organized,  in  respect  to  state  banks,  and 
that  this  interest  may  be  taken  in  advance.  The  knowingly  taking, 
receiving,  reserving,  or  charging  a  greater  rate  of  interest  effects  a  for- 
feiture of  the  entire  interest,  but  does  not  prevent  a  recovery  of  the 
principal.    If  a  greater  rate  of  interest  has  actually  been  paid,  the  per- 

62  N.  Y.  .'{44;   'niompson  v.  Nesbit.  2  Kicb.  Law  (S.  C.)  73;    Tuni-y  v.  (Jiant,  !• 
Smcdes  &  M.  (Miss.)  89. 

143  Anslcy  v.  liank,  113  Ala.  407,  47"J,  21  South.  .VJ. 

i**  Hawk.  r.  C.  bk.  1,  c.  82;   Sutli.  Daiu.  g  ;;(>1. 

14  5  Rcf  2  rnrs.  Notes  &  P..  301. 

140  i;;  Stat.  00;    Uev.  St.  U.  S.  §  5107. 


NEW    YORK    STATUTES.  27 

son  paying  it,  or  his  legal  representatives,  may  recover  back  twice  the 
amount  of  interest  thus  paid,  by  »n  action  to  be  brought  within  two 
years  from  the  consummation  of  the  transaction. 

Tliis  statute  thus  embodies  two  provisions:  First,  that  in  case  of 
an  action  by  the  bank  upon  a  usurious  agreement,  only  the  principal 
of  the  loan  may  be  recovered,  and  the  defendant  may  set  up  the  defense 
of  usury  to  defeat  a  recovery  of  any  interest;  and,  secondly,  that  in 
such  an  action,  where  interest  in  excess  of  the  legal  rate  has  already 
been  paid,  the  defendant  cannot,  by  way  of  counterclaim  or  offset,  re- 
cover under  the  clause  entitling  him  to  double  the  amount  thus  paid, 
but  must  enforce  that  right  by  a  separate  action  against  the  bank.^*^ 
And  this  federal  statute  applies  to  actions  by  or  against  national 
banks,  even  though  brought  in  a  state  court.^*^ 

The  general  scheme  of  the  federal  statute  is  found  embodied  in  some 
state  statutes,  and  will  be  further  discussed  in  the  following  sections. 

16.  NEW  YORK  STATUTES. 

In  New  York  there  are  two  principal  statutes  (with  some  minor  ones) 
relating  to  usury.  The  first  deals  with  the  general  subject,  and  the 
second  deals  with  loans  by  state  banks  and  "individual  bankers." 

(a)  Under  the  statute  first  mentioned,  the  rate  of  interest  upon  the 
loan  or  forbearance  of  any  money,  goods,  or  things  in  action  is  6  per 
cent.,  and  the  statute  prohibits  every  person  or  corporation  from  di- 
rectly or  indirectly  taking  or  receiving  in  monej^  goods,  or  things  in 
action,  or  otherwise,  any  greater  rate  of  interest  If  anv  higher  rate 
is  paid,  the  person  paying  it  may  recover  the  excess  by  action,  and  all 
bonds,  bills,  notes,  assurances,  conveyances,  and  all  other  contracts  or 
securities  (except  bottomry  and  respondentia  bonds  and  contracts), 
and  all  deposits  of  goods  or  other  things,  whereupon  or  whereby  there 
shall  be  reserved  or  taken,  or  secured  or  agreed  to  be  reserved  or  taken, 
any  greater  sum,  or  greater  value,  for  a  loan  or  forbearance,  than  is 

14  7  Baruet  v.  Bank,  98  U.  S.  5.55, 

lis  Natioual  Bank  of  Auburn  v.  Lewis,  81  N.  Y.  15;  Marion  Nat.  Bank  v. 
Thompson  (Ky.)  40  S.  W.  903;  Peterborougli  Nat.  Bank  v.  Cliilds,  133 
Mass.  248,  251;  First  Nat.  Bank  of  Clarion  v.  Gruber,  91  Pa.  St.  377.  As  to 
the  meaning  of  "twice  the  amount  of  interest  paid,"  which  may  be  recovered, 
see  Hill  v.  Bank,  15  Fed.  432;  Hintermister  v.  Bank,  04  N.  Y.  212. 


28  USUKY. 

prescribed  by  the  statute,  are  void;^*®  and  a  person  who  directly  or 
indirectly  receives  any  interest,  discount,  or  consideration  upon  the 
loan  or  forbearance  of  money,  goods,  or  things  in  action  greater  than 
is  allowed  by  statute,  is  guilty  of  a  misdemeanor.^^"  It  will  thus  be 
noticed  that  under  this  statute  usury  invalidates  the  contract  for  re- 
payment, and  no  action  will  lie  by  the  lender  1o  recover  even  the  prin- 
cipal; while  the  borrower,  if  he  has  paid  excessive  interest,  may  re- 
cover such  excess. 

(b)  Another  statute  (Laws  1892,  c.  GS9,  §  55)  follows  in  practically 
identical  language  the  federal  statute  relating  to  national  banks,  but 
applies  its  provisions  to  state  banks  and  individual  bankers,  fixes  the 
legal  rate  at  6  per  cent.,  and  adds:  "The  true  intent  and  meaning  of 
this  section  is  to  place  and  continue  banks  and  individual  bankers  on 
an  equality  in  the  particulars  herein  referred  to  with  the  national 
banks  organized  under  the  act  of  congress."  ^^^ 

The  result  of  these  provisions  is  that  under  this  statute  the  construc- 
tion given  to  the  federal  act  restricting  the  right  of  the  borrower 
who  has  actually  paid  excessive  interest  to  recover  twice  the  amount 
thereof  to  a  direct  action,  applies  also  to  the  state  statute,  so  that  such 
a  claim  cannot  be  set  up  by  way  of  counterclaim  or  offset  in  an  action 
by  the  lender  to  recover  the  principal.^ '^^ 

The  New  York  law,  prior  to  the  revision  of  1892,  above  cited,  re- 
ferred in  terms  not  only  to  banks  and  "individual  bankers,"  but  also 
to  "private  bankers."  The  term  "individual  banker"  denotes  a  person 
who,  having  complied  with  the  statutory  requirements,  has  received 
authority  from  the  banking  department  to  engage  in  the  business  of 
banking,  subject  to  its  inspection  and  supervision.  "Private  bankers" 
are  persons  or  firms  engaged  in  banking  without  having  any  special 
privileges  or  authority  from  the  state.  The  statute,  as  it  stood  prior 
to  1892,  protected  not  only  banking  corporations,  and  individual  bank- 
ers, but  also  private  bankers,  from  the  consequences  imposed  by  the 
general  statutes  on  citizens  not  engaged  in  banking  who  receive  more 
than  the  legal  rate  of  interest.^ ^* 

148  2  Rev.  St.  (0th  Ed.)  pp.  1854-1857. 

150  Pen.  Code,  §  378. 

151  Act  June  3,  18G4  (13  Stat.  09). 

152  Caponigri  v.  Altieri,  20  App.  Div.  304,  51  N.  Y.  Supp.  418. 

1"  rerkins  v.  Smith,  116  N.  Y.  441,  449,  23  N.  E.  21;   Carley  v.  Tod,  83  Hun, 


STATUTES  OF  OTHER  STATES,  29 


17.  STATUTES  OF  OTHER  STATES. 

As  already  stated,  the  statutes  of  nsiiiy  in  the  several  states,  while 
similar  in  many  respects,  differ  in  some  particulars  among  themselves. 
Thus,  in  New  York,  if  interest  is  paid  at  a  usurious  rate,  the  excess 
may  be  recovered  back  by  an  action;  ^^*  while  in  Nebraska  and  other 
states  the  borrower  cannot  recover  any  part  of  the  interest  paid,  but  is 
coufineH:!  to  the  defense  of  usury  in  an  action  against  him  on  the  con- 
tract. ^^ 

Under  such  statutes  the  payment  of  the  usurious  interest,  together 
with  the  whole  of  the  principal,  constitutes  a  settlement ;  while,  if  the 
contract  or  note  be  only  partially  settled,  then  the  defense  of  usury  can 
still  be  made.^'^'^  And  by  Rev.  St.  U.  S.  §  5198,  if  usurious  interest 
has  been  paid  to  a  national  bank,  twice  that  amount  may  be  recovered 
by  action.^ °' 

So,  by  the  general  New  York  statute,  usury  renders  void  the  con- 
tracts or  securities  reserving  or  securing  it,  while  in  other  states  the 
contract  is  not  avoided,  but  in  an  action  thereon  the  plaintiff  may  still 
recover  the  principal  without  any  interest,  diminished  by  any  interest 
that  shall  have  been  already  paid.^^^  And  under  the  federal  statute,^ ^^ 
and  also  the  New  York  statute  relating  to  banks  and  individual  bank- 
ers, usury  forfeits  the  interest,  but  the  principal  may  be  recovered 
without  offset,  the  borrower  being  left  to  his  action  for  debt  to  recover 
twice  the  interest  paid.^*^'' 

r)3,  73,  31  N.  Y.  Supp.  635.  But  as  to  the  effect  of  Laws  1892,  c.  689,  above 
summarized,  which  omitted  the  term  "private  banker,"  see  Hawley  v.  Kouutze, 
16  Misc.  Rep.  249.  250,  38  N.  Y.  Supp.  327  (reversed,  but  not  on  this  point,  in 
6  App.  Div.  217,  39  N.  Y.  Supp.  897). 

154  2  Rev.  St.  (9th  Ed.)  p.  1854. 

155  Blain  v.  Willson,  32  Neb.  302,  49  N.  W.  224;  Latham  v.  Association,  77 
N.  C.  145;  Haddeu  v.  Innes,  24  111.  381;  Quinn  v.  Boynton,  40  Iowa,  304; 
Spurlin  v.  Millikin,  10  La.  Ann.  217. 

156  New  England  Mortg.  Sec.  Co.  v.  Aughe,  12  Neb.  504,  11  N.  W.  753; 
Hadden  v.  Innes,  24  111.  381. 

157  So,  in  actions  in  New  York  against  state  banks  and  individual  bankers. 
Laws  1892,  c.  689,  §  55. 

158  Blain  v.  Willson,  32  Neb.  .302.  49  N.  W.  224. 
is»Rev.  St.  U.  S.  §  5198. 

160  Barnet  v.  Bank,  98  U.  S.  555,  558. 


30  USURY. 

In  still  other  states  the  parties  may  a.mce  in  any  conliacl  in  w  riling' 
for  the  })aymeut  of  any  rale  of  interest,  and  it  must  ihtii  he  allowfd. 
both  at  law  ami  in  eiinity.  ainl  (here  can  be  no  relief  on  (he  mereyronnd 
of  excessive  interest  in  the  absence  of  fraud  or  imposition. ^"^  Fur- 
ther variations  also  exist  in  different  jurisdictions,  under  the  terms  of 
local  statutes,^"* 

18.   EXCEPTIONS. 
Demand  Loans. 

In  New  York,  where  advances  of  money,  repayable  on  demand,  to 
an  amount  not  less  than  )?5,000,  are  made  upon  warehouse  receipts, 
bills  of  ladinf?.  certificates  of  stock,  certificates  of  deposit,  bills  of  ex- 
change, bonds  or  other  negotiable  instruments  pledged  as  collateral 
security  for  such  repayment,  it  is  lawful  to  receive,  or  contract  to  re- 
ceive, and  collect,  as  comi)ensation,  any  sum,  to  be  agreed  upon  in  writ- 
ing by  the  parties  to  such  transaction. ^*^^  And  where  one  borrows  a 
sum  not  less  than  |5,000  upon  his  note,  secured  by  shares  of  stock,  the 
fact  that  he  gives  to  the  lender,  at  the  same  time,  an  agreement  to 
sell  him  such  stock  at  the  latter's  option,  at  a  specified  price,  even 
though  the  price  fixed  is  less  than  its  actual  value,  does  not  take  the 
case  out  of  the  protection  of  the  statute  relating  to  call  loans  upon 
security.  The  effect  of  the  statute  is  to  remove  such  loans  from  the 
oj)eration  of  the  usury  laws,  and  it  seems  that  the  only  importance  of 
an  agreement  in  writing  as  to  the  sum  to  be  received  by  the  lender 
is  to  enable  the  latter  to  collect  more  than  G  per  cent,  as  his  compensa- 
tion.^ «* 

Loans  to  Corporations. 

It  is  also  provided  by  statute  in  New  York  that  no  corporation  shall 
interpose  the  defense  of  usury.  The  term  "corporation,"  as  used  in 
the  New  York  statute,  includes  all  associations  and  joint-stock  com- 
panies having  any  of  the  powers  or  privileges  of  corporations  not  pos- 
sessed by  individuals  or  partnerships.^®" 

101  Boyce  v.  Fisk,  110  Cal.  107,  42  Pac.  473;    Pub.  St.  Mass.  p.  42(). 

162  See,  also,  In  general,  3  Gen.  St.  N.  J.  pp.  3703,  3704;  Brightly,  Punl. 
Dig.  Pa.  (l'_'th  Ed.)  pp.  10(;2-10(>4;  Pub.  St.  Mass.  p.  420;  1  Supp.  Pub.  St. 
Mass.  p.  7.^7;   2  Supp.  I'ub.  St.  Mass.  p.  GGl. 

i«3  2  Kev.  St.  (0th  Ed.)  p.  lOGO,  §  50. 

i«*  Ilawley  v.  Kountze,  0  App.  Div.  217,  30  N.  Y.  Supp.  Sl»7. 

185  2  Kev.  St.  (Dth  Ed.)  p.  1855. 


EXCEPTIONS.  3 1 

The  result  of  this  statute  is  that  "the  condition  of  this  class  of  boinjrs 
bc'coiiics  the  same  as  if  the  usury  laws  never  existed,"  so  far  as  con- 
cerns contracts  governed  by  the  laws  of  New  York.  Imf  the  act  has  no 
application  to  contracts  controlled  by  the  laws  of  another  state  or  coun- 
try/«« 

LodiiK  hi/  Pawnbrokers. 

I'awnbrokers  are  generally  required  by  statute  to  procure  licenses, 
and  the  interest  they  may  charge  is  usually  fixed  by  law  at  a  rate  in 
excess  of  that  allowed  in  other  cases.  In  New  York  ^^^  the  rate  is 
fixed  at  3  per  cent,  per  month  for  the  first  six  months,  and  2  per  cent, 
per  month  thereafter,  on  loans  not  exceeding  $100,  and  at  a  lower  rate 
for  larger  loans. 

Loans  hy  Pawnhrohing  Corporations. 

By  Laws  N.  Y.  1895,  c.  326,  amended  by  Laws  N.  Y.  1896,  c.  206. 
provision  is  made  for  the  incorporation,  in  certain  counties,  of  corpo- 
rations for  the  loan  of  money  not  exceeding  .$200  to  any  one  person, 
upon  pledge  or  mortgage  of  personal  property;  and  by  section  3  it  is 
provided  that  such  corporations  may  charge  upon  each  loan  made 
without  the  actual  delivery  to  it  of  the  property  pledged  interest  at  the 
rate  of  3  per  cent,  per  month  for  a  period  of  two  months  or  less,  and 
not  exceeding  2  per  cent,  per  month  for  any  further  period.  Section 
5  provides  that  in  any  such  county  no  person  or  corporation  other  than 
corporations  organized  under  the  act  shall  charge  or  receive  any  inter- 
est, discount,  or  consideration  greater  than  at  the  rate  of  6  per  cent, 
per  annum  upon  the  loan,  use,  or  forbearance  of  money,  goods,  or  things 
in  action  less  than  |200  in  amount  or  value,  or  upon  the  loan,  use,  or 
sale  of  personal  credit  in  any  wise,  where  there  is  taken  for  such  loan, 
use,  or  sale  of  personal  credit  any  security  upon  any  household  furni- 
ture, etc.  A  violation  of  this  prohibition  is  a  misdemeanor,  and  upon 
proof  of  the  fact  the  debt  shall  be  discharged,  and  the  security  void. 
But  the  section  does  not  apply  to  licensed  pawnbrokers  making  loan 
upon  the  actual  and  permanent  deposit  of  personal  property  as  se- 
curity. 

166  Curtis  V.  Loavitt  15  N.  Y.  9,  85. 

167  2  Eev.  St.  (9th  Ed.)  p.  2573,  §  7. 


82  USURY. 


19.   COMPENSATION  FOR  SERVICES. 

\Miether  the  paymeut  of  a  sum  described  as  commissions,  in  addition 
to  the  le.ual  rate  of  interest,  renders  a  loan  usurious,  depends  on  the 
question  of  fact  whether  or  not  the  person  to  whom  it  is  paid  is  in 
reality  tlie  agent  of  the  borrower  to  procure  the  loan,  and  is  thus  paid 
for  his  services  in  procuring  it.  If  so,  this  is  no  ground  for  charging 
the  lender  with  usury.^"^ 

But  if  the  alleged  agent  of  the  borrowtM-  i<'ally  received  the  so- 
called  commission  as  an  additional  payment  for  the  loan,  on  behalf  of 
th(^  lender,  the  transjiction  is  usurious.^"" 

The  mere  fact  that  the  person  to  whom  a  commission  is  paid,  and  by 
whom  it  is  exacted,  is  in  fact  also  an  agent  of  the  lender  in  reference 
to  effecting  the  loan,  does  not,  in  itself,  result  in  usury.  To  have  that 
effect,  it  must  be  shown  that  he  took  it  with  the  knowledge  and  assent 
of  the  lender,  so  that  the  latter,  at  least  by  acquiescence,  became  a 
])arty  to  the  usurious  exaction.  It  is  not  even  sufficient  to  show  that 
the  lender  knew  of  the  usurious  exaction  after  he  had  made  the  loan 
and  the  transaction  was  completed.  He  nmst  have  known  of  it  at  the 
time.  Nor  is  it  sufficient  to  show  that  he  supposed  that  his  agent  was 
to  receive  some  compensation  for  services  which  he  rendered  to  the  bor- 
rower.^ ^" 

But  where  an  agent  authorized  to  lend,  though  not  to  take  usury, 
lends  the  money  of  his  principal  at  a  usurious  rate,  and  both  the  sura 
lent  and  the  usury  exacted  are  secured  by  the  same  instrument,  which 
the  principal,  knowing  that  it  is  for  a  larger  amount  than  the  sum 

i«8  Telford  v.  Garrets.  1.32  111.  550,  5.54,  24  N.  E.  573;  Moore  v.  Bogart.  19 
Ilnn  (X.  Y.)  227;  Goodwin  v.  Bishop,  145  111.  421,  34  N.  E.  47;  Ginn  v.  Se- 
rurity  Co.,  92  Ala.  135,  138,  8  South.  388;  Couover  v.  Van  Mater,  18  N.  .7.  Eq. 
481;  Grant  v.  Insurance  Co.,  121  U.  S.  105,  7  Sup.  Ct.  841;  Smith  v.  Wolf,  55 
Iowa.  ."..->.  8  N.  W.  42{>. 

leoBraine  v.  Kosswog,  13  App.  Div.  249,  42  N.  Y.  Supp.  l(n)8;  Id..  153 
N.  Y.  047,  47  N.  K.  1105;  Hare  v.  Hooper  (Neb.)  76  N.  W.  10.55;  Hughson 
v.  Loan  Co.  (N.  J.  Ch.)  41  Atl.  492. 

i7«stillman  v.  Northrup,  109  N.  Y.  473,  17  N.  K.  379;  Call  v.  Palmer,  116 
U.  S.  98,  0  Sup.  Ct.  301;  Muir  v.  Institution,  10  N.  J.  Kq.  537;  Chicago  Fire- 
Prootiig  Co.  V.  Park  Nat.  Bank,  145  111.  481,  32  N.  E.  534. 


SALES  OF  PROPERTY  OR  CREDIT.  33 

loaned,  without  explanation,  accepts,  and  has  the  benefit,  he  adopts  the 
act  of  his  agent  the  same  as  if  it  had  been  done  by  himself.^^^ 

As  the  borrower  may  pay  a  third  party  for  services  in  connection 
with  x>rocuring  the  loan,  without  rendering  the  loan  itself  usurious, 
so  he  may  pay  to  the  lender,  out  of  the  money  borrowed,  or  the  lender 
may,  by  his  direction,  retain,  a  sum  in  excess  of  interest,  if  it  is  in 
reality  a  bona  fide  payment  for  services  rendered  to  the  borrower  by 
the  lender  in  other  connections,  and  is  not  a  cloak  for  usury.^'^ 

So  a  payment  by  a  borrower  to  the  lender's  agent,  under  the  lender's 
requirement,  of  the  expenses  of  examining  the  title  of  the  property 
mortgaged  as  security  and  of  preparing  the  necessary  papers,  or  a 
clause  providing  for  payment  of  attorney's  fees  in  foreclosure,  if  nec- 
essary, has  been  held  unobjectionable.^ ^^  And  the  borrower  may  even 
validly  agree  to  pay  the  lender,  in  addition  to  legal  interest,  for  the 
latter's  services  and  disbursements  in  collecting  in  other  loans  from 
others,  in  order  to  lend  to  him,  and  for  that  purpose  going  to  another 
town,  borrowing  funds  to  make  up  the  required  loan,  etc.  For  such 
payment  is  not,  if  bona  fide,  for  the  loan,  but  for  work,  labor,  services, 
and  expenses. ^^* 

20.  SALES  OF  PROPERTY  OR  CREDIT. 

Usury  laws  apply  only  to  a  loan  or  forbearance  of  money,  and  not  to 
a  sale.  The  purchase,  for  example,  of  an  existing  security  for  money 
at  a  discount,  is  a  common  and  legitimate  transaction,  and  the  pur- 
chaser may  enforce  it  for  its  full  amount.  Such  a  transaction  may, 
of  course,  however,  be  a  cloak  for  a  usurious  loan,  and  in  that  case 
it  will  not  avail.^^^ 

iTiBliven  v.  Lyclecker,  130  N.  Y.  107,  28  N.  E.  625;  McNeely  v.  Ford,  103 
Iowa,  508,  72  N.  W.  G72. 

172  Swanstrom  v.  Balstad,  51  Minn.  276,  53  N.  W.  648. 

i73Ammondson  v.  Ryan,  111  111.  506;  Giun  v.  Security  Co.,  92  Ala.  135, 
138,  8  South.  3S8;  Glover  v.  Mortgage  Co.,  31  C.  C.  A.  105,  87  Fed.  518.  See 
Ellenbogen  v.  Griffey.  55  Ark.  268,  272,  18  S.  W.  126. 

174  Thurston  v.  Cornell,  38  N.  Y.  281;  Harger  v.  McCullough,  2  Denio  (N. 
Y.)  119;   Eaton  v.  Alger,  *41  N.  Y.  41;   Palmer  v.  Baker,  1  Maule  &  S.  56. 

17  5  Siewert  v.  Hamel,  91  N.  Y.  199,  202;    Standen  v.  Brown,  152  N.  Y.  128, 
46  N.  E.  167;    Ellenbogen  v.  Griffey,  55  Ark.  268,  18  S.  W.  126;    Struthers  v. 
Drexel,  122  U.  S.  487,  7  Sup.  Ct.  1293. 
INT.&U.— 3 


34  USURY. 

Thus,  nianv  statutes  relating  to  iisurv,  as,  for  pxaniplo.  Kov.  St. 
r.  i>.  §  r)l!>7,  and  I^iws  N.  Y.  1802,  c.  (189,  §  T).").  provide,  in  sul)stanct\ 
that  the  purchase,  discount,  or  sale  of  a  bona  fide  bill  of  exchange, 
note,  or  other  evidence  of  debt  payable  at  another  place  than  the  place 
of  such  purchase,  discount,  or  sale,  at  not  more  than  the  current  rate 
of  exchange  foi*  sight  drafts,  or  a  reasonable  charge  for  the  collection 
of  the  same  in  addition  to  the  interest ,  shall  not  be  considered  as  taking 
or  receiving  a  greater  rate  of  interest  than  6  per  cent. 

But,  to  come  within  the  field  of  a  sale,  there  must  be  an  existing 
valid  security  to  be  sold.  Thus,  where  one  makes  a  note,  and  gives  it 
to  a  note  broker  for  sale  at  a  rate  not  exceeding  G  per  cent,  per  annum, 
and  he  sells  it  at  a  discount  of  10  per  cent.,  the  real  nature  of  the 
transaction  is  a  loan  by  the  so-called  purchaser  to  the  maker  through 
the  broker,  and  accordingly  the  loan  is  usurious,  and  the  note  void.^' '' 

This  rule,  which  renders  void  a  note  in  the  hands  of  a  third  party 
who  has  purchased  it  at  a  discount  greater  than  the  legal  interest, 
finds  its  application  in  the  case  of  instruments  that  have  no  legal 
inception  between  the  parties,  or  which  are  not  intended  to  be  avail- 
able until  discounted.^'"  So,  a  sale  of  a  legacy,  if  bona  fide,  and  not 
a  cloak  for  usury,  is  valid,  though  the  price  paid  is  less  than  the  face 
of  the  legacy.^'^^  So,  a  sale  of  one's  credit  can  never  be  void  for  usury, 
at  whatever  price  it  may  be  made,  unless  it  can  be  seen  that  it  is  in- 
tended as  a  cover  for  a  usurious  loan  of  money.^^®  Any  person  is  at 
liberty  to  sell  his  credit  at  whatever  price  he  can  get  for  it,  precisely 
as  he  is  at  liberty  to  sell  any  other  property  which  he  may  have,^**^ 
except  where  it  is  specifically  prohibited  by  statute  under  given  circum- 
stances.^®*^ 

17  6  Claflin  V.  Booriim,  122  N.  Y.  385,  25  N.  E.  3G0;  Freeport  Bank  v.  Hage- 
meyer,  91  Hun,  194,  3C  N.  Y.  Supp.  214. 

177  .Toy  v.  Diefendorf,  130  N.  Y.  G,  10,  28  N.  E.  602.  See  National  Revere 
Bank  v.  Morse,  163  Mass.  .383,  385,  40  N.  E.  180. 

17  8  Hintze  v.  Taylor,  57  N.  J.  Law,  2.39,  30  Atl.  551. 

179  Forgotston  v.  McKeon,  14  App.  Div.  342.  .344,  43  N.  Y.  Supp.  9.39;  El  well 
V.  Chamberlin.  31  N.  Y.  611.  617;    More  v.  Howland,  4  Donio  (N.  Y.)  264. 

180  Forgotston  v.  McKcon,  14  App.  Div.  342,  344,  43  N.  Y.  Supp.  939. 

181  Pen.  Code  N.  Y.  §  378;   3  Rev.  St.  N.  Y.  (9lh  Ed.)  p.  2573,  §  7. 


BOTTOMRY    AND    RESPONDENTIA.  dO 


21.  INTEREST  IN  ADVANCE. 

If,  upon  the  making  of  a  loan,  interest  at  the  legal  rnlo  is  paid  in  ad- 
vance, the  necessary  result  is,  of  course,  to  give  the  lender  more  than 
legal  interest,  for  he  thus  has,  in  addition,  the  use  of  that  interest  be- 
fore his  loan  has  earned  it.  This  is  a  matter  which  has  been  variously 
treated  in  different  jurisdictions.  Thus,  in  Illinois,  it  is  not  usurious 
to  exact  the  payment  of  interest  in  advance.^ ^^  Thus,  by  the  federal 
law  relating  to  national  banks,  and  the  New  York  law  relating  to  state 
banks  and  individual  bankers,  it  is  provided  that  interest  at  the  legal 
rate  may  be  taken  in  advance,  reckoning  the  days  for  which  the  note, 
bill,  or  evidence  of  debt  has  to  run.  "Upon  the  discounting  of  com- 
mercial paper  not  havings  longer  time  to  run  to  maturity  than  the 
notes  and  bills  which  are  usually  discounted  by  bankers,  interest  on  the 
whole  amount  of  principal  agreed  to  be  paid  at  maturity,  not  exceed- 
ing the  legal  rate,  may  be  taken  in  advance."  ^^^  But,  in  order 
to  render  this  principle  applicable,  the  paper  discounted  must  be  a  ne- 
gotiable instrument,  and  payable  at  no  very  distant  day.^^^  So,  in- 
terest may  be  validly  made  payable  monthly,  quarterly,  or  semi- 
annually on  paper  having  a  longer  time  to  run.^^^ 

22.  BOTTOMRY  AND  RESPONDENTIA. 

The  fundamental  element  of  usury  consisting  in  the  corrupt  reser- 
vation or  exaction  of  a  payment,  for  a  loan  or  forbearance,  in  addition 
to  a  repayment  of  the  principal,  in  excess  of  the  legal  rate  of  interest, 
it  is  obvious  that  there  must  be  cases  where,  the  repayment  of  both 

182  Telford  V.  Garrets,  132  111.  ooO,  554,  24  X.  E.  573. 

issMarvine  v.  Hymers,  12  N.  Y.  223,  227;  Manhattan  Co.  v.  Osgood,  15 
Johns.  (N.  y.)  162;  New  York  Firemen's  Ins.  Co.  v.  Sturges,  2  Cow.  (N.  Y.) 
(>64;  Bank  of  Utica  v.  Wager,  Id.  712,  8  Cow.  (N.  Y.)  398;  Bank  of  Utica  v. 
Phillips,  3  Wend.  (X.  Y.)  408;  Utica  Ins.  Co.  v.  Bloodgood,  4  Wend.  (X.  Y.) 
652;  Thornton  v.  Bank,  3  Pet.  36;  International  Bank  v.  Bradley,  19  N.  Y. 
245.  254;  Lloyd  v.  Williams,  2  W.  Bl.  792. 

184  Mai-vine  v.  Hymers,  12  N.  Y.  223,  229;  Marsh  v.  Martindale,  3  Bos.  & 
P.  158. 

i«5  Mowry  v.  Bishop.  5  Paige  (N.  Y.)  98,  101;  Peirce  v.  Rowe,  1  X.  H.  179: 
Greenleaf  v.  Kellogg,  2  Mass.  568;  Gladwyn  v.  Hitchman,  2  Vern.  135;  Sessions 
V.  Richmond,  1  R.  I.  305. 


36  USURY. 

principal  and  interest  being  contingent,  tlie  reservation  of  a  reasonable 
paynunit  in  exccs!;;  of  tlie  legal  rate  lo  cmer  that  risk  would  not  fall 
witliin  the  purpose  of  the  prohibition.  Such  instances  ar(»  found  in 
the  case  of  loans  upon  bottomry  or  respondentia,  \vli<  re  money  is 
loaned,  respectively,  on  a  ship  or  its  cargo,  and  it  is  agreed  that,  if  the 
property  thus  pledged  to  secure  the  loan  should  be  lost,  the  borrower 
shall  repay  nothing  to  the  lender.''"' 

The  same  principle  applies  to  the  case  of  a  jnirchasc  of  an  annuity 
involving  similar  uncertainty,  and  to  the  so-called  post  obit  con- 
tracts.^^ ^ 

23.  USURY  AND  PENALTY  DISTINGUISHED. 

As  already  noticed,  statutes  of  usury  frequently  contained  two  dis- 
tinct provisions,  namely,  that  the  agreement  for  a  usurious  rate  of  pay- 
ment for  a  loan  or  forbearance  shall  result  in  a  forfeiture  of  either  prin- 
cipal or  interest  or  both,  and  that,  in  addition,  a  borrower  who  has  in 
fact  paid  interest  in  excess  of  the  legal  rate  may  recover  back  by 
action  not  merely  w^hat  he  has  paid,  but  an  additional  sum,  by  way  of 
penalty.      This  represents  one  use  of  the  term  ''penalty."  ^^^ 

A  second  sense  in  which  the  term  is  employed  is  found  in  cases 
where  one  agrees  that,  in  case  of  breach  Iw  him  of  his  agreement  to 
jiay  the  principal  when  due,  he  will  jiay  an  extra  sum  as  a  penalty  for 
the  breach.  This  is  unobjectionable,  for,  if  the  payment  of  the  extra 
sum  is  purely  conditional,  and  that  condition  it  is  within  the  power  of 
the  debtor  to  perform,  so  that  the  creditor  may,  by  the  debtor's  act,  be 
deprived  of  any  extra  payment,  it  is  not  usurious. ^'^^ 

isoThorudike  v.  Stone,  11  Tick.  (Mass.)  183;  Bmy  v.  Bates,  9  Mete.  (Mass.) 
237,  250;   1  Pars.  Mar.  Ins.  208. 

187  3  Tars.  Cotft.  140;  Lloyd  v.  Scott,  4  Tot.  20.j;  Id.,  0  Tet.  418;  Delano  v. 
Wild,  G  Allen  (Mass.)  1,  8;  Earl  of  Cbesterlield  v.  Jausseu,  1  Atk.  301,  2  Ves. 
Sr.  125;   Batty  v.  Lloyd,  1  A'eru.  141. 

i88  0sborn  v.  Bank,  154  Pa.  St.  134,  2G  Atl.  2S9. 

ISO  Sumner  v.  People,  29  X.  Y.  337;  Poiueroy  v.  Aiusworth.  22  Barb.  (N.  Y.) 
124;  Green  v.  Brown,  22  Misc.  Rep.  279,  49  N.  Y.  Supp.  103;  Floger  v.  Ed- 
wards, Cowp.  112,  115;  Garret  v.  Foot,  Comb.  133;  Roberts  v.  Trenayne, 
Cro.  Jac.  507;  Burton's  Case,  5  Coke,  G9a;  Cutler  v.  How,  8  Mass.  259.  But, 
if  it  Is  a  mere  cover  for  usury,  it  will  not  avail.  Sunnier  v.  People,  29  N.  Y. 
337,  342. 


CONTINGENT    BKNKFITS    AS    U.SL'UY.  37 


24.  NEGOTIABLE  INSTRUMENTS— BONA  FIDE  HOLDER. 

In  some  states,  Avhere  iisuiy  renders  void  the  instrument  affected 
thereby,  it  is  held  that:  "A  note  void  in  its  inception  for  usury  con- 
tinues void  forever,  whatever  its  subsequent  history  may  be.  It  is 
as  void  in  the  liauds  of  an  innocent  holder  for  value  as  it  was  in  the 
hands  of  those  who  made  the  usurious  contract.  No  vitality  can  be 
given  it  by  sale  or  exchange,  because  that  which  the  statute  has  de- 
clared void  cannot  be  made  valid  by  passing  through  the  channels  of 
trade."  ^°°  While  in  other  states,  where  a  usurious  note  is  not  void, 
but  void  or  voidable  as  to  the  usury  only,  at  the  instance  of  the  debtor, 
it  is  held  that,  if  a  purchaser  of  a  note  knows  nothing  of  the  usury  be- 
tween the  original  parties,  he  will  not  be  affected  thereby.^^^  While 
in  still  others,  where  the  statute  renders  the  note  void  as  to  interest 
while  valid  as  to  principal,  the  innocent  purchaser  for  value,  before 
maturity,  may  enforce  it  as  to  principal,  but  not  as  to  interest,  for  it 
gathers  no  validity  by  circulation.^'*-  After  a  lender  has  parted  with 
the  note  given  for  the  loan  to  a  bona  fide  holder,  the  latter  cannot  be 
prejudiced  by  any  subsequent  acts  of  the  original  parties.^®' 

25.  CONTINGENT  BENEFITS  AS  USURY. 

When  a  lender  stipulates  for  a  contingent  benefit  beyond  the  legal 
rate  of  interest,  and  has  the  right  to  demand  the  repayment  of  the  prin- 
cipal sum,  with  the  legal  interest  thereon,  in  any  event,  the  contract 
is  in  violation  of  the  statute  for  prohibiting  usury;  as,  for  example, 
where,  in  addition  to  stipulating  for  legal  interest  in  any  event,  a  bor- 
rower agreed  that  the  lender  should  have  a  contingent  interest  in  the 
profits  of  a  certain  business.^^* 

190  Claflin  v.  Booriim,  122  N.  Y.  385,  25  N.  E.  360;  Union  Bank  of  Rochester 
V.  Gilbert,  83  Hun,  417,  420,  31  N.  Y.  Supp.  945. 

191  Bi-adsliaw  v.  Van  Yalkenburg,  97  Teun.  31G,  320,  37  S.  W.  88. 

192  Miles  V.  Kelley  (Tex.  Civ.  App.)  40  S.  W.  599,  GOl;  Andrews  v.  Hoxle, 
5  Tex.  172;  Ward  v.  Sugg,  113  N.  C.  489,  18  S.  E.  717. 

193  Seymour  Opera-House  Co.  v.  Thurston  (Tex.  Civ.  App.)  45  S.  W.  815. 

194  Browne  v.  Vredenburgh,  43  N.  Y.  195;  Gilbert  v.  Wai'ren,  19  App.  Div. 
403,  4G  N.  Y.  Supp.  489. 


38  USURY. 


26.   SUBSTITUTED  SECURITIES. 

V^lien  a  sermilv  tainted  with  usury  is  jiivcii  up,  ;um1  n  new  security 
substituted,  in  renewal  or  continuance,  the  new  security  is  also  tainted 
with  usury.^"" 

27.  SUBSEQUENT  USURIOUS  AGREEMENT. 

If,  when  a  loan  is  made,  there  is  no  agreement  for  usurious  interest, 
the  fact  that  subsequently  it  is  agreed  that  a  usurious  rate  shall  be 
paid,  and  notes  for  the  loan  are  given,  which  are  invalidated  by  this 
illegal  feature,  the  invalidity  of  the  notes  does  not  react  upon  the 
original  loan,  so  as  to  invalidate  it  also.  The  only  effect  of  avoiding 
the  notes  is  to  leave  the  original  loan  standing.^^"  So  the  mere  fact 
that  excessive  interest  has  been  paid  does  not  show  that  it  was  origi- 
nally agreed  on  or  exacted  for  the  loan  or  forbearance.^ °"  And  so  a 
promissory  note,  not  originally  usurious,  cannot  be  made  so  by  an 
agreement  for  an  extension,  subsequently  entered  into,  in  consideration 
of  a  payment  of,  or  a  promise  to  pay,  usurious  interest.^ ^^ 

28.  RECOVERING  BACK  USURIOUS  PAYMENTS. 

The  rule  that,  when  a  plaintiff  is  in  pari  delicto  with  the  defendant, 
money  i)aid  by  the  former  to  the  latter  cannot  be  recovered  back,  ap- 
plies only  where  the  act  done  is  in  itself  immoral,  or  a  violation  of  the 
general  law'S  of  public  policy,  but  does  not  bar  a  recovery  where  the 
law  violated  is  intended  for  the  protection  of  the  citizen  against  op- 

lasTreadwell  v.  Archer,  76  N.  Y.  ldC>;  Walker  v.  Bank,  3  How.  67,  71; 
Feldman  v.  McGraw,  1  App.  Div.  574,  37  N.  Y.  Siipp.  434;  Id.,  14  App.  Div. 
631,  43  N.  Y.  Supp.  S85;  Sheldon  v.  Haxtun,  91  N.  Y.  124,  131;  Marion  Nat. 
Bank  v.  Thompson  (K3\)  40  S.  VY.  003-905;  BroAvu  v.  Bank,  169  U.  S.  416, 
18  Sup.  Ct.  300;  Bank  of  Russellville  v.  Coke  (Ky.)  45  S.  W.  867;  Fanners' 
Bank  of  Kearney  v.  Oliver  (Neb.)  7G  N.  W.  449;  Tardoe  v.  Bank  (Iowa)  76 
N.  W.  800.  See  First  Nat.  Bank  of  Garden  City  v.  Segal.  121  Pa.  Co.  Ct.  R. 
113;   McFarland  v.  Bank  (Kan.  App.)  52  Pac.  110. 

106  In  re  Consalus,  05  N.  Y.  340,  344;  Humphrey  v.  McCauley,  55  Ark.  143, 
146,  17  S.  W.  713;   Nichols  v.  Pearson,  7  Pet.  104. 

10-  Willard  v.  Pinard,  05  Yt.  100,  KM'),  26  Atl.  67. 

108  Morse  v.  AVellconie,  OS  Minn.  210,  70  N.  W.  978. 


RECOVKRING    BACK    USURIOUS    PAYMKNTS.  39 

pression.  extortion,  or  deceit.  Within  the  latter  class  falls  the  case 
of  usurious  pavnicnts.^"® 

This  principle  is  subject,  of  course,  to  that  elsewhere  discussed,  and 
adopted  under  the  statutes  of  some  states, — that,  if  all  the  principal 
and  usurious  interest  have  been  paid,  no  action  will  lie  to  recover 
back  the  interest. 

Statutes  authorizing  actions  to  recover  back  usurious  interest  that 
has  been  paid  provide  that  they  must  be  brought  within  some  specified 
time  "from  the  time  when  the  usurious  transaction  occurred."  Under 
such  a  clause,  the  "usurious  transaction"  occurs  only  when  a  greater 
amount  than  the  principal,  with  legal  interest,  has  been  paid,  or  judg- 
ment has  been  taken  for  such  greater  amount.  In  other  words,  the 
time  of  the  limitation  does  not  begin  to  run  until  the  creditor  has 
received,  in  the  way  of  payment  of  principal  and  usurious  inter- 
est, a  sum  in  excess  of  the  principal  and  legal  interest,  or  has 
taken  judgment  for  such  excessive  sum.  The  theory  is  that  the 
creditor,  when  entitled .  in  any  event  to  his  principal,  and  only  liable 
to  a  forfeiture  of  interest,  or  to  a  recovery  thereof  by  the  borrower, 
or  of  some  larger  sum  by  way  of  penalty,  in  case  he  has  actually  re- 
ceived an  excess,  has  an  election  to  repent  him  of  his  usurious  exac- 
tion, which  may  be  made  or  evidenced  by  crediting  all  payments  re- 
ceived, whether  intended  at  the  time  they  are  made  to  be  of  usury  or 
not,  on  the  principal  or  legal  interest ;  and  his  failure  to  avail  himself 
of  this  option,  and  his  receipt  of  illegal  interest,  cannot,  while  he  still 
has  this  locus  pcenitentise,  be  affirmed;  so  that  until  the  payment  of 
an  actual  excess  above  principal  and  legal  interest,  or  judgment  there- 
for, the  "usurious  transaction"  has  not  "occurred."  ^°° 

After  the  time  limited  by  the  statute,  no  further  right  of  action  ex- 
ists.=«^ 

i99Hiiitze  V.  Taylor,  57  N.  J.  Law,  239,  241,  30  Atl.  551;  Jones  v.  Barkley, 
Doug.  684;  Wheaton  v.  Hibbard,  20  Johns.  (N.  Y.)  290;  Thomas  v.  Shoemaker, 
6  Watts  &  S.  (Pa.)  183. 

200  First  Nat.  Bank  of  Gadsden  v.  Denson,  115  Ala.  050,  22  South.  518, 
522;  Duncan  v.  Bank,  Fed.  Cas.  No.  4,135;  McBroom  v.  Investment  Co.,  153 
r.  S.  318,  328,  14  Sup.  Ct.  852,  85(3;  Stevens  v.  Lincoln,  7  Mete.  (Mass.)  525; 
Harvey  v.  Insurance  Co.,  60  Yt.  209,  14  Atl.  7. 

201  Palen  v.  Johnson,  46  Barb.  (N.  Y.)  23,  affirmed  in  50  N.  Y.  49;  Matthews 
V.  Paine,  47  Ark.  54,  14  S.  W.  403.  Compare  Wheaton  v.  Hibbard,  20  Johns. 
(N.  Y.)  290;  Brown  v.  Mcintosh,  39  N.  J.  Law,  22;  Baum  v.  Thoms  (Ind. 
Sup.)  50  N.  E.  357. 


4U  USURY. 

Statutes  antlioiizinj];  the  borrower  or  his  "personal  representatives" 
to  recover,  for  example,  twice  the  excess  over  legal  iulcrcsl,  do  uot 
allow  such  an  action  by  his  assij^uee.-"- 

29.  CREDITING  USURIOUS  PAYMENTS. 

As  long  as  anv  sum  is  due  upon  a  lawful  debt,  out  of  or  in  connec- 
tion with  which  a  usurious  contract  has  once  arisen,  all  payments  made 
on  either  should  be  credited  on  the  valid  claim.-**^ 

Where  a  debtor  does  in  fact  pay  the  lender  sums  in  excess  of  legal 
interest,  but  only  from  motives  of  gratitude  or  generosity,  and  not  in 
pursuance  of  an  agreement  or  exaction  for  the  loan  or  forbearance 
of  money,  he  cannot  recover  such  payments  back,  or  have  them  credited 
as  payments  upon  the  principal.-''^ 

30.  WHO  MAY  SET  UP  USURY. 

The  right  to  set  up  the  defense  of  usury  is  personal  to  the  borrower, 
and,  under  some  circumstances,  those  in  privity  with  him;  as,  for  ex- 
ample, his  heirs,  devisees,  mortgagees  subsequent  to  a  usurious  mort- 
gage, purchasers,  and  trustees.-"^ 

31.  PLEADING  USURY. 

Usury,  as  a  defense,  must  be  pleaded.  It  is  like  every  other  defense, 
and  cannot  be  proved  unless  it  is  set  up  in  the  answer.  If  it  is  not 
pleaded,  it  will  be  considered  as  waived.  And  the  rule  is  so  strict  with 
reference  to  pleading  it  that  it  has  been  held  that  it  nnist  be  set  forth 
"with  such  precision  and  certainty  as  to  make  out  on  the  face  of  the 

202  Pardee  v.  Bank  (Towa)  70  N.  W.  800;  Osboni  v.  liank.  175  Pa.  St.  -I'.H. 
490,  34  Atl.  8.'jS. 

203  iluini)lu-ey  v.  :McCauley,  55  Ark.  143,  147,  17  S.  W.  713;  Payne  v.  Nfw- 
comb,  100  111.  Gil;  Rogers  v.  Buckintiham.  .33  Conn.  81;  Fretz  v.  Murray 
(Mich.)  70  N.  W.  405;  Hasklns  v.  Bank,  100  Ga.  210,  127  S.  E.  985. 

2  04  White  V.  Benjamin,  138  N.  Y.  023,  020,  33  N.  K.  1037. 

2  0.'-,  Berilan  v.  Sfdgwick,  44  N.  Y.  020;  Williams  v.  Tilt.  .'lO  X.  Y.  310,  3-J5; 
Post  V.  Dart,  8  Pai-^o  (X.  Y.)  030;  De  Wolf  v.  Johusuu,  10  \\lK;it.  307,  303; 
Ureen  v.  KL-nip,  13  Mass.  515;  3  I'ars.  Cunl.  122. 


CRIMINAL    PROSECUTION    FOR    USURY.  41 

pleading  that   a   corrupt   and  usurious   contract   has   been   entered 
into."  2o« 

It  is  not  necessary  to  use  the  word  "corrupt,"  nor  even  the  word 
"usury,"  if  the  facts  establishing  those  incidents  of  the  transaction  are 
set  forth;  ^"^  but  merely  applying  epithets,  or  pleading  a  definition  of 
usury,  does  not  constitute  that  "plain  statement  of  facts"  necessary 
to  a  sufficient  pleading.-"' 

32.  BURDEN  OF  PROOF. 

Where  the  defense  of  usury  is  interposed,  the  burden  of  showing 
that  the  special  agreement  for  an  illegal  rate,  which  must  exist  in 
every  case  of  usury,  was  in  fact  made,  rests  upon  the  defendant.^"^ 
He  enters  upon  the  defense  with  the  presumption  against  the 
violation  of  the  law  and  in  favor  of  the  innocence  of  the  party  charged 
with  the  usury.  It  is  a  just  requirement  that  all  the  facts  constituting 
the  usury  should  be  proved  with  reasonable  certainty,  and  that  they 
should  not  be  established  by  mere  surmise  and  conjecture,  or  by  in- 
ferences entirely  uncertain.^ ^* 

33.  CRIMINAL  PROSECUTION  FOR  USURY. 

TVTiere  a  statute  simply  provides,  as  in  New  York  (Pen.  Code,  §  378), 
that  a  person  receiving  usurious  interest  shall  be  guilty  of  a  misde- 
meanor, the  allegations  of  an  indictment  thereunder,  in  order  to  consti- 
tute a  good  plea,  must  not  merely  allege  the  unlawful  exacting  and 
receiving  of  a  specified  sum  in  excess  of  the  legal  rate  for  the  loan  and 
forbearance  of  another  specified  sum  for  a  specified  period,  but  must 
charge  the  usurious  agreement,  specifying  its  terms,  and  the  par- 
ticular facts  relied  upon  to  bring  it  within  the  prohibitive  clause  of  the 

20  6  Laux  V.  Gildersleeve,  23  App.  Div.  352,  355.  48  N.  Y.  Supp.  301;  Chapuis 
V.  Mathot,  91  Hiin,  565,  36  N.  Y.  Supp.  835;  Stanley  v.  Bank,  165  111.  205,  46 
N.  E.  273;  Mosier  v.  Norton,  83  III.  519.  See  HoUis  v.  Association  (Ga.)  31 
S.  E.  215;   Ansley  v.  Bank,  113  Ala.  467,  479,  21  South.  59. 

207  Miller  v.  Schuyler,  20  N.  Y.  522. 

20  8  Chapuis  v.  Mathot,  91  Hun,  565,  568,  36  N.  Y.  Supp.  835. 

209  Rosenstein  v.  Fox,  150  N.  Y.  354,  363,  44  N.  E.  1027;  Guggenheimer  v. 
Geiszler,  81  N.  Y.  293;   Telford  v.  Gerrels,  132  111.  550,  554,  24  N.  E.  573. 

210  White  V.  Benjamin,  138  N.  Y.  623,  33  N.  E.  1037. 


42  USURY. 

section.  The  reason  is  that  the  receiving  or  exacting  of  a  greater 
rate  of  interest  than  is  authorized  by  statute  may  or  may  not  consti- 
tute usury,  according  to  the  circumstances;  for,  in  order  to  constitute 
usury,  it  must  appear  that  the  exaction  and  reception  of  the  additional 
interest  was  in  pursuance  of  a  mutual  agreement  between  the  parties, 
and  this  agreement  must  be  alleged  and  proved.^^^ 

And  where  the  statute  (Pen.  Code  N.  Y.  §  37S),  requires  the  receipt 
of  usurious  interest  in  order  to  render  the  lender  guilty  of  a  crime, 
the  mere  corrupt  agreement  to  exact  or  receive  it,  which  would  suffice 
as  a  defense  in  a  civil  action  on  the  contract,  will  not  suffice  to  secure 
a  conviction.  And  therefore,  in  a  civil  action,  where  the  defendant 
seeks  an  examination  of  the  plaintiff  in  order  to  learn  the  details  of  the 
original  transaction  of  which  he  is  ignorant,  in  order  that  he  may  plead 
them  in  connection  with  the  defense  of  usury,  the  plaintiff  cannot 
object  that  the  examination  would  compel  the  disclosure  of  facts  con- 
stituting a  criminal  offense,  if,  for  all  that  appears,  it  would  only  dis- 
close an  agreement  for,  and  not  a  receipt  of,  usurious  interest.^^' 

34.  EQUITABLE  BELIEF  AGAINST  IMPROVIDENT 
BARGAINS. 

^Trom  an  early  period  equity  has  relieved  against  usurious  con- 
tracts by  requiring  payment  of  the  principal  debt  and  legal  interest. 
*  *  *  It  would  not,  as  is  supposed,  follow  the  repeal  of  all  usury 
laws,  that  even  then  courts  of  equity  would  refuse  to  afford  relief. 
'No  usury  laws  now  exist  in  England,  having  been  repealed  by  stat- 
ute. It  has  nevertheless  been  decided  that  the  repeal  of  these  laws 
did  not  alter  the  doctrine  by  which  the  court  of  chancery  affords 
relief  against  improvident  and  extravagant  bargains.' "  -^^  Thus  an 
agreement,  made  in  advance,  to  pay  compound  interest,  save  in  certain 
excepted  cases,  elsewhere  considered,  although  not  usurious,  is  not 
enforceable.^^* 

211  People  V.  Hubbard,  10  Misc.  Eep.  lOi,  31  N.  Y.  Snpp.  114. 

212  Fox  V.  Miller,  20  App.  Div.  333,  46  N.  Y.  Supp.  837. 

213  Bisp.  Eq.  §  222.     Higgins  v.  Lanslngh,  154  111.  301,  370,  40  N.  E.  3G2. 

214  Van  Benschooten  v.  Lawson,  6  Johns.  Ch.  (N.  Y.)  313;  Young  v.  Hill, 
67  N.  Y.  1G2;  Higgins  v.  Lansingh,  154  111.  301.  '^0,  40  N.  E.  302;  Bowman 
V.  Neely.  137  III.  443,  27  N.  E.  758.  But  see  Boyce  v.  Fisk,  110  Cal.  107,  42 
Pac.  473. 


WAIVER    OF    USURY.  43 


35.   EQUITABLE  RELIEF  AGAINST  USURIOUS  TRANSACTION, 

When  a  borrower  on  usurious  interest  "comes  into  a  court  of  equity 
to  ask  for  relief  by  having  the  transaction  set  aside,  equity  will  not 
afford  him  redress,  except  upon  the  terms  of  his  returning  the  amount 
actually  borrowed,  with  lawful  interest."  ^^"^  This  rule  has  been  chan- 
ged, so  far  as  concerns  suits  by  borrowers,  in  New  York,  by  statute.^^' 
But  the  term  "borrower,"  in  the  New  York  statute  last  cited,  is  used 
in  its  literal  sense.  It  does  not  apply  to  his  sureties,  his  grantees,  or 
his  devisees,  or  his  assignee  in  bankruptcy.  The  act  was  intended  to 
confer  a  special  and  peculiar  privilege  upon  the  actual  borrower,  and 
is  purely  personal.  The  devisee,  for  example,  cannot  secure  equitable 
relief  against  a  usurious  mortgage  placed  on  the  land  devised  by  his 
devisor,  without  offering  to  pay  the  principal,  with  legal  interest.^ ^^ 

36.  WAIVER  OF  USURY. 

Even  where  a  statute  declares  usurious  agreements  void,  they  are 
void  only  in  a  limited  sense.  They  are  not  so  absolutely  void  that 
the  borrower  is  prevented  from  making  payment  if  he  desires;  and, 
if  he  voluntarily  does  this,  he  cannot  reclaim  the  money  thus  paid. 
Nor  are  they  so  far  void  that  the  borrower  is  not  at  liberty  to  deduct 
the  payment  of  the  debt.  Thus  the  maker  of  a  general  assignment  for 
the  benefit  of  creditors  may  lawfully  include  in  it,  and  direct  the  pay- 
ment of,  a  usurious  debt;  so  the  borrower  of  money  upon  a  usurious 
contract,  which  is  secured  by  a  mortgage  upon  land,  upon  making 
sale  of  the  land  may  lawfully  contract  w  ith  his  vendee  for  the  payment 
of  the  usurious  mortgage,  and  the  vendee  will  not  then  be  at  liberty 
to  set  up  the  objection  of  usury.^^* 

aisBisp.  Eq.  §  43;   Hubbard  v.  Tod,  19  Sup.  Ct.  14. 

216  2  Eev.  St.  (9th  Ed.)  p.  IS.-.G,  §  8.  See,  also,  Scott  v.  Austin.  36  Minn. 
460,  32  N.  W.  89,  864;  Krumsieg  v.  Trust  Co.,  71  Fed.  350;  Mathews  v.  Trust 
Co.  (Minn.)  72  N.  W.  121. 

217  Buckingham  v.  Corning,  91  N.  Y.  525;   Hubbard  v.  Tod,  19  Sup.  Ct.  14, 
2i8Berdan  v.  Sedgwick,  44  N,  Y.  626,  630;    Chapuis  v.  Mathot,  91  Hun, 

565,  36  N.  Y.  Supp.  835;  Cole  v.  Savage,  10  Paige  (N.  Y.)  583;  Hartley  v. 
Harrison,  24  N.  Y.  171;  Murray  v.  Judson,  9  N.  Y.  73;  Chapin  v.  Thompson,  89 
N.  Y.  270. 


44  USURY. 

But  subsequent  grantees  of  the  mortgaged  premises,  with  no  agree- 
ment to  either  assume  or  take  subject  to  the  prior  and  usurious  mort- 
gage, ma}-,  upon  foreclosure,  set  up  the  defense  of  usury,  even  though 
judgment  has  been  rendered  against  the  mortgagor,  establishing  the 
validity  of  the  mortgage,  if  such  judgment  was  subsequent  to  the 
purchase  of  the  land;  for  after  that  date  the  mortgagor  cannot  do 
any  act  to  affect  his  gran  tee.- ^^ 

37.  ESTOPPEL. 

The  doctrine  of  estoppel  extends  to  the  case  of  usury,  and  in  appro- 
priate cases  prevents  the  borrower  from  setting  up  that  defense.  But 
it  is  subject  to  the  qualification  that  the  person  by  whom  it  is  in- 
voked must  not  be  a  stranger  to  the  transaction,  or  one  whose  conduct 
the  declaration  was  not  designed  to  influence.  Thus,  where  an  as- 
signee for  value  takes  a  chose  in  action — for  example,  a  bond  and 
mortgage — by  assignment,  in  reliance  upon  the  debtor's  explicit  written 
declaration  that  he  has  no  defense  or  set-off  to  the  debt  assigned,  and 
that  it  will  be  good  and  valid  in  the  hands  of  an  assignee,  the  debtor 
cannot  set  up  in  defense,  on  foreclosure,  that  the  bond  and  mortgage 
are  void  for  usury;  and  this  is  true  although  the  plaintiff  in  foreclo- 
sure is  a  second  assignee,  so  that  the  debtor  did  not  have  him  specif- 
ically in  mind  in  executing  the  declaration,  for  the  circumstances  are 
such  as  to  entitle  the  second  assignee  to  rely  on  the  declaration.--"* 

38.  PUKGING  FROM  USURY. 

A  usurious  contract  can  be  purged  of  the  taint  of  usury,  and  money 
loaned  upon  a  usurious  contract  can  furnish  a  valid  consideration  for 
a  promise  to  pay  the  money  actually  loaned.    If  the  usurious  contract 

219  Berdan  v.  Sedgwick,  44  N.  Y.  626.  See  Natioual  Loan  &  Investment  Co. 
of  Detroit  v.  Stone  (Tex.  Civ.  App.)  46  S.  AV.  67;  Building  &  Loan  Ass'n  of 
Dakota  v.  Price,  Id.  92;  People's  Building,  Loan  &  Savings  Ass'n  v.  Sellars, 
Id.  370. 

220  Weyh  v.  Boylan,  85  N.  Y.  394;  Mechanics'  Bank  of  Brooklyn  v.  Town- 
send,  29  Barb.  (N.  Y.)  569;  Stoll  v.  Reel,  11  Misc.  Rep.  461.  32  N.  Y.  Supp. 
737;  Horn  v.  Cole,  51  N.  H.  287;  Holbrook  v.  Zinc  Co.,  57  N.  Y.  616;  Ashton's 
Appeal,  73  Pa.  St.  153;  Ryall  v.  Rowles,  2  White  &  T.  Lead.  Cas.  Eq.  pt.  2, 
p.  1G73. 


PURGING    FROM    USURY.  45 

be  mutually  abandoned  bj  the  parties,  and  the  securities  be  canceled 
or  destroyed  so  that  they  can  never  be  made  the  foundation  of  an 
action,  and  the  borrower  subsequently  makes  a  contract  to  pay  the 
amount  actually  received  by  him,  this  last  contract  will  not  be  tainted 
with  the  original  usury,  and  can  be  enforced. "i 

221  Sheldon  V.  Haxtun,  91  N.  Y.  124,  132;  McConkey  v.  Petterson,  15  App 
Diy.  77,  44  N.  Y.  Supp.  286;  Kilbourn  v.  Bradley,  3  Day  (Conn.)  35G;  Houser 
V.  Bank,  57  Ga.  95. 


WEST    PUBLISHING  CO..  PBINTERS  AND  STEEEOTVPERS,  ST.  PALL,  MINN: 


^^      ^.o    rC'-A^      L^-.4^^    ^f.4''^-W    /tcA-^VtrO       UCff^^     ^  '  " 

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W    ic.  '  ly^AP^'  Sr 


PRINCIPLKS 


OF    THE 


LAW  OF  ARBITRATION  AND  AWARD 


A    MONOGRAPH    RY 

R.  W.  FISHER 


St.  Paul,  Minn. 

WEST  PUBLISHING    CO. 

1896 


COPYKIGHT,  1S96, 
BV 

WEST  PUBLISHING  COMPANY. 
+ 


ARBITRATION   AND   AWARD. 


1. 

Ill  (rcnernl. 

2_ 

I'artu's. 

3. 

Subject-Matter. 

4. 

1"he  Arbitrators. 

5. 

The  Submission. 

(i. 

Kevocatiou. 

7. 

I'roceedings. 

8. 

Award. 

9. 

Impeacliiuent. 

10. 

Effect. 

11. 

Enforcement. 

IN  GENERAL. 

1.  Arbitration  is  the  investigation  and  determination  of  dis- 
puted matters  by  one  or  more  unofiB.cial  persons, 
called  "arbitrators"  or  "referees,"  chosen  by  the 
parties  to  the  controversy. 

The  term  "arbitration"  is  often  broadly  used  to  include  all  the 
various  steps  in  the  settlement  of  a  controversy  by  reference  to 
third  persons,  and  in  this  sense  to  embrace  the  award;  but  a  more 
strict  use  confines  its  meaning  to  the  submission  and  the  hearinj», 
the  decision  being  separately  spoken  of  as  the  "award."  ^  The  dis- 
tinguishing feature  of  an  arbitration  is  that  it  amounts  to  a  sub- 
stitution, by  the  parties,  of  judges  of  their  own  selection  for  the 
usual  remedies  offered  by  the  courts,  under  an  agreement,  expres.'^ed 
or  implied,  that  the  unprejudiced  decision  of  these  persons,  after 
a  full  and  fair  hearing,  shall  be  binding  and  final.-  But  while  a 
submission  to  arbitration  is  thus,  to  an  extent,  a  taking  of  the 
controvers}'  out  of  the  hands  of  the  courts,  its  scope,  procedure,  and 
effect  are  limited  and  controlled  by  certain  well-defined  rules  whi(  li 
make  up  what  is  technically  called  the  "law  of  arbitration  and 
award."      Most  of  these  rules  have  for  their  object  the  protection  of 

1  Black,  Law  Diet.  2  Abb.  Law  Diet. 

ARB.  &  AWARD — 1 


•J  AIJHITKATION     AND    A\VA1U>. 

<'a(li  i»;uly  from  tlii'  fraud  or  uufainu'ss  of  the  other  or  of  the 
ailiitialor,  and  to  scrni-c  an  nuprcjiRlicod  decision  upon  the  merits 
of  tlic  I'onlroversy  as  ]nvs<'nted  by  the  parties.  If  these  results 
aif  reached.  Ilie  settlement  will  }2;enerally  be  upheld,  regardless  of 
any  lack  of  formality  in  tlie  i)i()ceediugs.' 

PARTIES. 

2.  Generally,  the  power  of  a  party  to  a  controversy  to 
submit  it  to  arbitration  is  co-extensive  with  his  ca- 
pacity and  authority  to  contract  relative  to  the  sub- 
ject-matter. But  to  this  rule  may  be  made  the  fol- 
lowing exceptions: 

(a)  Agents,  from   a  general   authority  to  contract,  have 

no  implied  power  to  arbitrate. 

(b)  Partners   have   no    general   pow^er   to  bind  their  co- 

partners by  a  submission  to  arbitration. 

(c)  Of&cers  of  the  United  States  have  no  power,  as  such, 

to  refer  matters  arising  out  of  the  public  business 
under  their  control. 

Ill  General. 

As  to  the  contractual  capacity  of  the  parties,  an  ag^reement  to 
suimiit  a  disputi^d  matter  to  arbitration  is  governed  by  the  general 
law  (jf  conti-acts."*  But,  in  addition  to  being  legally  competent  to 
c(»nti-aet,  the  parties  to  a  submission  must  have  such  control  over 
ilie  subject-matter  as  will  enable  them  to  perform  any  legal  award 
that  may  be  made.°  The  power  to  submit  to  arbitration  generally 
grows  out  of  the  j)ower  or  authority  to  compromise"   or  to  prosecute 

3  Si'j',  ;,'('ncrally.  cases  cited  under  note  12o. 

*  .Morse.  Arb.  :'.;  Caldw.  Aib.  l.j;  Kuss.  Arb.  l,j;  Shelf  v.  Baily,  1  Comyn, 
18.".;  I'.iady  V.  Mayor,  etc..  1  Harb.  (N.  Y.)  584;  Burrell  v.  Joues,  8  Barn. 
&  Aid.  17:  Blair  v.  Wallace,  21  Cal.  317;  Cox  v.  Taj;ger,  2  Cow.  (N.  Y.)  U38; 
W-.-d  V.  i;ilis.  3  Cables  (N.  Y.)  2.j4. 

•'■  Morse,  Arb.  3.  Thus,  a  religious  corporation,  which  has  no  power,  with- 
oiM  coiisciil  of  the  supreme  court,  to  sell  its  real  estate,  cannot  submit  to 
Mrl)ilration  (he  rincstion  whether  it  shall  be  bold.  Wyalt  v.  Beusou,  23 
B.'ub.  (N.  V.I  :;27. 

c  S.liofT  V.  Bloonilield.  8   Vt.  472. 


PARTIES.  3 

or  defend  a  suit  relative  to  the  subject  matter;  ^  and  it  mi^'ht  !».• 
laid  down  as  a  s^'ueral  rule  that  any  person  conijictcnt  to  conlraet 
in  an  individual  or  a  representative  cai)acity  may  submit  to  aibi- 
tration  any  eivil  controversy  for  the  determination  of  wliidi  he 
has  the  right  or  authority  to  prosecute  a  suit.  From  thcs.-  prin 
ciples  it  follows  that  the  submission  of  an  infant  in  his  own  right 
is  voidable  at  his  election;  **  since  he  has  neither  capacity  to  con- 
tract nor  power  to  sue.  Corporations,  both  municipal  '•'  and  pri 
vate/°  may  be  parties  to  a  submission,  and  are  bound  by  an  award 
legally  rendered.      Administrators  ^^    and  executors  ^^   may  submit 

7  Buckland  v.  Conway,  IG  Mass.  39(5;  Alexandria  Canal  Co.  v.  Swnnn.  5 
How.  83;  Somers  v.  Balabrcga,  1  Uall.  1G4-  Brady  v.  Mayor,  etc.,  1  Barb. 
<N.  Y.)  584. 

8  Russ.  Arb.  18;  Morse,  Arb.  4;  Bac.  Abr.  "Arbitration,"  C;  Godfrey  v. 
Wade,  0  Moore,  488;  Rudstou  v.  Yates,  March,  111,  141;  Baker  v.  Lovett,  (J 
Mass.  78;   Britton  v.  Williams'  Devisees,  6  Munf.  (Va.)  453. 

9  Brady  v.  Mayor,  etc.,  1  Barb.  (N.  Y.)  584;  Kane  v.  City  of  Fond  du  Lac. 
40  Wis.  495;  Buckland  v.  Conway,  IG  Mass.  39();  Sclioff  v.  Bloomlield,  8 
Vt.  472;  Campbell  v.  Upton,  113  Mass.  67;  City  of  Shawneetowu  v.  Baker, 
85  111.  5G3.  Under  a  statute  giving  selectmen  of  a  town  power  "to  audit,  and 
in  their  discretion  to  allow,  the  claim  of  any  person  against  the  town  for 
money  paid  or  servies  performed  for  the  town,"  they  have  power  to  submit 
to  arbitration  a  claim  against  the  town  for  building  a  bridge.  Dix  v.  Dum- 
merston,  19  Vt.  2G2. 

10  Alexandria  Canal  Co.  v.  Swann,  5  How.  83;  Wood  v.  Railroad  Co.,  8 
N.  Y.  160;  Isaacs  v.  Society,  1  Hilt.  (N.  Y.)  469;  Madison  Ins.  Co.  v.  Griffin. 
3  Ind.  277;  Memphis  &  C.  R.  Co.  v.  Scruggs,  .50  Miss.  284;  Proprietors  of 
Fryeburg  Canal  v.  Frye,  5  Greenl.  (Me.)  38;  Merchants'  Bank  of  Macon  v. 
Taylor,  21  Ga.  334. 

11  Worthington  v.  Barlow,  7  Term  R.  453;  Barry  v.  Rush.  1  Term  R.  691; 
Lyle  V.  Rodgers,  5  Wheat.  394;  Dickey  v.  Sleeper,  13  Mass.  244;  Coffin  v. 
Cottle,  4  Pick.  (Mass.)  4.54;  Bean  v.  Farnam,  G  Pick.  (Mass.)  2G9;  Bacon 
V.  Crandon,  15  Pick.  (Mass.)  79;  Jones  v.  Deyer,  16  Ala.  221;  Russell  v.  Lane, 
1  Barb.  (N.  Y.)  519;  Chadbourn  v.  Chadbourn,  9  Allen  (Mass.)  173;  Eaton 
T.  Cole,  1  Fairf.  (Me.)  137;  Kendall  v.  Bates,  35  Me.  357;  Mercliants'  Bank 
of  Macon  v.  Taylor,  21  Ga.  334;  Wheatley  v.  Martin's  Adm'r,  6  Leigh  (Va.) 
€2;  Ailing  v.  Munson,  2  Conn.  691.  But  when  the  statute  expressly  requires 
all  claims  against  the  estate  to  be  adjusted  in  a  particular  way,  the  adminis- 
trator cannot  resort  to  arbitration.  Clark  v.  Hoglt,  52  111.  427;  Reitzell  v. 
Miller,  25  111.  53;   Yarborough  v.  Leggett.  14  Tex.  67V. 

12  Morse,  Arb.  19;  Russ.  Arb.  29;  Bac.  Abr.  "Arbitrament."  C;  Wood  v. 
Tuunicliff,  74  N.  Y.  38;    Logsdon  v.  Roberts'  Ex'rs,  3  T.  B.  Mou.  (Ky.)  255; 


-I  AKIUTKATION    AND    AWAKI). 

(•l;iinis  in  fjivor  of  or  a.uainst  tlio  estatcn  they  represent.  The 
•;u;u(lian  of  an  infant  '■'  oi-  a  lunaiic''  may  submit  on  behalf  of 
the  wai'l;  but  a  miard'an  ad  litem  has  no  sueli  power.^^  An  at- 
torney emitioyed  to  prosei  nte  or  defend  a  suit  may  submit  it  to 
arbitration*"  without  sjiecial  authority  from  the  client  to  do  so.*' 
A  married  woman  may  refei  a  disjiule  relatin;;  to  property  of  which 
she  has  absolute  control  and  independent  power  of  disposal;  and 
she  will  be  bound  by  any  submission  by  the  husband,  where  he  has 
jiower  to  carry  out  the  award  without  her  joinder  or  consent,  or 
where  such  joinder  would  be  enforced  by  law,  if  necessary  to  the 
jH'rfoiinance  of  the  award.* ^ 

Atjents. 

An  aj^ent  cannot  make  a  submission  in  behalf  of  his  princi])al 
unless  the  auiliority  to  do  so  is  expressly  given  or  arises  by  neces- 

ovcrly's  Ex'r  v.  Overly's  Devisees,  1  Mete.  (Ky.)  117;  aud  cases  cited  iu  uote 
11.  supra. 

I'*  Wats.  Art).  41;  Weed  v.  Ellis,  3  Cainos  (N.  Y.)  252;  Strong  v.  Beroiijou, 
IS  Ala.  1(»;  Goleiiian  v.  Turner,  14  Smedes  &  M.  (Miss.)  US;  MeComb  v. 
Turner,  14  Sniedes  A:  M.  (Miss.)  119. 

1*  Iluteliins  V.  Johnson,  12  Conn.  370;  Weston  v.  Stuart,  2  Fairf.  (Me.) 
32t;;    Bean  v.  Farnani,  0  Pick.  (Mass.)  2()9;    and  cases  cited  iu  preceding  note. 

1 '•  Ilannuni's  Ilcirs  v.  Wallace.  9  Humph.  (Tenn.)  129;  Frazier  v.  Paulcey, 
1  Swan  (Tenn.)  7.3;  Fort  v.  Battle,  13  Smedes  &  M.  (Miss.)  133.  See,  also, 
Wlic;itl(  y's  Lessee  v.  Harvey.  1  Swan  (Tenn.)  484. 

i';2  Tars.  Cont.  CSS;  Moise,  Arli.  1.");  Kuss.  Arb.  2."»;  Souiers  v.  Balabrega,  1 
Dall.  IVA;  Wil.son  v.  Young.  9  Pa.  St.  101;  Holker  v.  Parker,  7  Crauch,  43(); 
Kvars  v.  Kaniphaus,  ."9  Pa.  St.  379;  Babb  v.  Stroml)erg,  14  Pa.  St.  397; 
Stok.ly  V.  Hobin.sou,  34  Pa.  St.  31.");  Talbot  v.  McGee,  4  T.  B.  Mon.  (Ky.)  37.5; 
i;.v.  rly  V.  Stepliens,  17  Ala.  701;  Town  of  Alton  v.  Town  of  Gilinauton.  2  N. 
II.  .".I'o;  \\illi:iius  V.  Danziger,  91  Pa.  St.  2:^2.  But  the  client  may  revoke 
thi'  suliniission,  in  some  cases,  before  it  is  acted  upon.  Wilson  v.  Young,  9 
Pa.  St.  loi;  Cf)leman  v.  Gru1)h,  2.3  Pa.  St.  ;>93;  Bingliam's  Trustees  v.  Guth- 
rl.',  Ill  Pa.  St.  41S, 

1"  "It  is  lielicved  to  be  the  i)ractice  tlu-ougliout  the  Union  for  suits  to  be 
rcfi-rriMl  l)y  consent  of  counsel  without  special  autliority.  and  this  universal 
jiractice  nnist  l»e  founded  on  a  general  conviction  tiiat  tlie  power  of  an  at- 
toniev  at  law  over  the  <-ause  of  his  client  extends  to  sucli  a  rule."  Marsliall, 
('.  .].,  in  Holker  v.  Parker,  7  Cranch,  43»>.  See,  also,  I'ilmer  v.  Dell)er,  3 
Tamit.  4S*;. 

'".Morse,  .\rh.  2<;:  liac  Al)r.  "Ar])itration,"  (';  Fnvt  v.  Battle.  13  Smedes 
A:  M.  (.Miss.)  i;;:{;    McComb  v.  Turner.   14  Smedes  A:  .M.   (.Miss)   119;    I.uuiley 


I'A1>TIK.S.  ) 

sary  implication  from  the  powers  conferred;^'-'  fur  otherwise  the 
submission  would  be,  in  elTect,  an  unwarranted  delej^ation  of  iIk? 
agent's  power  to  bind  his  principal.-"  No  power  to  submit  lo  ar- 
bitration is  imijlied  from  a  general  authority  to  contract,-^  or  to 
collect--  or  "settle''-"  claims  or  accounts.  But  it  seems  tliat 
any  authority  to  an  agent  to  secure  or  enforce  any  kind  of  a  judi- 
cial determination  of  the  matter,  or  which  gives  him  absolute  con- 
trol over  it,  will  imply  power  to  arbitrate.  Thus,  authority  to  pios- 
ecute  or  defend  a  suit  gives  by  implication  power  to  submit  it  to 
arbitration.-^  Authority  to  "compromise''  a  claim  has  been  held 
to  warrant  a  reference  by  the  agent;  ^"'  and  the  t-ame  effect  has 
been  given  to  a  general  authority  to  act  for  a  partner  in  the  dis- 
solution of  the  firm  and  settlement  of  its  business.-'* 
Partners. 

A  submission  by  one  partner  without  special  authority  is  not 
binding  on  his  co-partners.-'      This  is  unquestioned  so  far  as  con- 

V.  Huttou,   Cro.  Jac.  447;    iMempliis  &  C.  R.  Co.  v.   Scruggs,  50  Miss.  2M. 
See,  also,  Spuvck  v.  Crook,  19  111.  415. 

10  Bacon  v.  Dubarry,  1  Ld.  Eayin.  24G;  Cox  v.  Fay,  54  Vt.  446;  Trout  v. 
Emmons,  29  111.  433;  Gibbs  v.  Holcomb,  1  Wis.  33;  Scarborough  v.  Reynolds, 
12  Ala.  252;  Ingraham  y.  Whitmore,  75  111.  24;  Michigan  tjent.  R.  Co.  v. 
Gougar,  55  111.  503;  Lowoustein  v.  Mcintosh,  37  Barb.  (N.  Y.)  251.  Authority 
to  an  agent  to  make  the  submission  does  not  empower  him  to  ratify  the 
award,  when  made.    Bullitt  y.  Musgrave,  3  Gill  (Md.)  31. 

20  But  the  unauthorized  submission  by  an  agent  may  be  ratified  by  the 
principal,  and  thus  rendered  binding.  Diedrick  v.  Richley,  2  Hill  (N.  Y.) 
271;  Perry  v.  Mulligan.  58  Ga.  479;  Furber  v.  Chamberlain,  9  Fost.  (N.  H.) 
405;  Memphis  &  C.  R.  Co.  v.  Scruggs.  50  Miss.  284;  Isaacs  v.  Society,  1  Hilt. 
(N.  Y.)  4G9. 

21  Story.  Ag.  §  98;  Bacon  v.  Dubariy,  1  Ld.  Raym.  246;  Trout  v.  Emmons, 
29  111.  433;    Scarborough  v.  Reynolds,  12  Ala.  252. 

2  2  See  Pars.  Cont.  689;    Morse,  Arb.  11,  and  cases  there  cited. 

23  Mechem,  Ag.  §  405;  Huber  v.  Zimmerman,  21  Ala.  488;  Michigan  Cent. 
R.  Co.  V.  (4ougar.  55  111.  503;    Scarborougli  v.  Reynolds,  12  Ala.  252. 

24  Buckland  v.  Conway,  16  Mass.  396;  Wilson  v.  Young,  9  Pa.  St.  101; 
Somers  v.  Balabrega,  1  Dall.  164. 

2  3  Schoff  V.  Bloomfield.  8  Vt.  472. 

2  6  Henley  v.  Soper,  8  Barn.  &  C.  16. 

27  Morse,  Arb.  7;  Russ.  Arb.  20;  1  Pars.  Cont.  191;  1  Lindl.  Partn.  129; 
Karthaus  v.  Ferrer,  1  Pet.  222;  St.  Martin  y.  Thrasher,  40  Vt.  400;  Antram 
V.  Chace,  15  East,  209;    Stead  v.  Salt,  10  Moore,  389;    Fancher  v.  Furnace 


6  AKHITUATIOX    AND    AWAKD. 

i-crns  submissions  by  an  instrument  requirinj;-  ;i  seal.-^  And  while 
tluTc  are  cases  upboldinii  llii'  power  of  one  partner  to  bind  the  firm 
b.v  a  parol  submission  not  specially  authorized,-^  the  weight  of 
authority  clearly  sustains  the  rule  that  such  submissions  are  not 
binding  on  co-partners  not  consenting  thereto  before  the  award  is 
rendered.^"  In  such  cases  the  partner  making  the  unauthorized 
submission  is  alone  bound.^^ 

United  States  Officers. 

It  is  not  within  the  general  powers  of  an  officer  of  the  United 
States  to  submit  to  arbitration  any  matter  involving  the  rights 
of  the  government.^-  The  denial  of  this  power  is  put  upon  the 
ground  that,  as  the  constitution  has  vested  the  judicial  power  in 
the  supreme  and  inferior  courts,  no  officer  of  the  government  can 
vest  it  elsewhere.  Such  a  submission,  it  is  said,  must  be  based 
on  special  authority  given  by  an  act  of  congress. 

Co.,  SO  Ala,  481,  2  South.  2GS;  Wood  v.  Shepherd,  2  Tat.  &  H.  (Va.)  442 
Walker  v.  Beau,  34  Miun.  427,  2G  N.  W.  232;  Buchoz  v.  Grandjeau,  1  Mich 
3t;T;  Joues  v.  Bailey,  5  Cal.  345;  Harriugtou  v.  Higliam,  13  Barb.  (N.  Y.)  600 
-''  Backus  v.  Coyue,  35  Mich.  5;  Savercool  \  Farwell,  17  ISIich.  321;  Bu- 
chauau  v.  Curry,  19  Johus.  (N.  Y.)  137;  Karthaiis  v.  Ferrer,  1  Pet.  222 
Davis  v.  Berger,  54  Mich.  (i52,  20  N.  W.  629'  McBride  v,  Hageu,  1  Wend 
(X.  Y.)  32G;  St.  Martin  v.  Thrasher,  40  Vt.  460;  Abbott  v.  Dexter,  6  Cush 
(Mass.)  108;   and  cases  cited  in  preceding  note. 

2  9  Such  is  the  law  in  Illinois,  Ohio,  Kentucky,  and  Pennsylvania.  See  Hal- 
lack  v.  March,  25  111.  33;  AVilcox  v.  Singletary.  Wright  (Ohio)  420;  Southard 
V.  Steele,  3  T.  B.  Mon.  (Ky.)  435;  Taylor  v.  Coryell,  12  Serg.  &  R.  (Pa.) 
243;    Gay  v.  Waltnian,  89  Pa.  St.  453. 

3  0  See,  generally,  cases  cited  in  notes  27,  28  and  31.  Also.  Eastman  v. 
Burleigh,  2  N.  H.  484;  Horton  v.  Wilde.  8  Gray  (Mass.)  425;  Mackay  v. 
Bloodgood,  9  Johns.  (N.  Y.)  285;  Tillinghast  v.  (Jilniore,  17  II.  I.  413,  22 
Atl.  942.  But  the  assent  of  the  partner  may  be  presumed  where  he  is  pres- 
ent at  the  hearing,  and  fails  to  object.    See  Hallack  v.  March,  25  111.  33. 

31  1  Lindl.  Partn.  129;  Buchanan  v.  Curry,  19  Johns.  (N.  Y.)  137;  Strang- 
ford  V.  Green.  2  Mod.  228;  Harrington  v.  Higham,  13  Barb.  (N.  Y.)  G(!0; 
.McBride  v.  Ilagen,  1  Wend.  (N.  Y.)  326;  Smith  v.  Van  Nostrand,  5  Hill 
(.\.  Y.)  419;  Karthaus  v.  Ferrer,  1  Pet.  222.  An  unauthorized  submission  by 
a  partner  may  operate  as  a  release  of  the  partnership  claim  where  he  ac- 
f<-Itts  the  amount  awarded  in  favor  of  the  firm,  and  indorses  a  receipt  on 
thf  award.    Buchanan  v.  C(u-it,  19  Johns.  (N.  Y.)  137. 

3  2  U.  S.  V.  Auu'S,  1  Woodb.  &  M.  76,  Fed.  Cas.  No.  14,441. 


S  U  BJ  ECT-M  ATTER . 


SUBJECT-MATTER. 

3.  Any  actual  doubt  or  dispute  which  the  parties  might 
legally  settle  by  contract  may  be  submitted  by 
them  to  arbitration. 

A  doubtful  or  disputed  matter,  to  eonie  withiu  the  nieanin<^  of 
tbis  rule,  must  be  of  such  a  character  that  its  determination  will 
require  an  exercise  of  judicial  discretion  on  the  part  of  the  arbi- 
trator, and  not  merely'  the  performance  of  a  ministerial  act.^^  A 
doubt  or  uncertainty  which  an  application  of  the  ordinary  rules 
of  calculation  or  measurement  would  remove  will  not  serve  as  the 
basis  of  an  arbitration.  Thus,  a  surveyor  chosen  to  establish  a 
boundary  line,^'*  an  accountant  to  examine  the  accounts  of  the 
parties  and  report  a  balance,^ ^  a  clerk  to  calculate  the  interest 
on  a  note  and  determine  the  amount  due,^®  persons  chosen  to  de- 
termine the  difference  to  be  paid  in  an  exchange  of  slaves,^'  are 
generally  not  regarded  as  arbitrators,  nor  are  their  reports  given 
the  conclusiveness  of  awards.^®  The  same  may  be  said  generally 
of  persons  chosen  to  appraise  property  according  to  their  own 
judgment  of  its  value;  ^'^  although  in  some  cases  appraisers  have 
been  regarded  as  arbitrators.***  The  reference  of  a  matter  con- 
cerning which  no  dispute  exists,  for  the  purpose  of  preventing  future 

33  Morse.  Arb.  36;  Leeds  v.  Burrows,  12  East.  1;  Hale  v.  Handy,  2G  X.  H. 
206;  Norton  v.  Gale,  95  111.  533;  McKinney  v.  Page,  32  Me.  513;  Terry  v. 
Chandler,  16  N.  Y.  354;  Elmendorf  v.  Harris.  5  Wend.  (N.  Y.)  521;  Lee  v. 
Hemingway,  3  Nev.  &  M.  SGO. 

34  Thayer  v.  Bacon,  3  Allen  (Mass.)  163. 

3  5  Stage  V.  Gorich,  107  111.  361;    Kelly  \.  Crawford,  5  Wall.  785. 

3  6  Grimes  v.  Blake,  16  Ind.  160. 

37  Curry  v.  Lackey,  35  Mo.  389. 

3  8  But  see  Board  of  Trustees,  etc.,  y.  Lynch,  5  Gilman  (III.)  521;  McAvoy 
V.  Long,  13  111.  147;  Bobbins  v.  Clark,  129  Mass.  145;  Oakes  v.  Moore,  24 
Me.  214. 

39  See  cases  cited  in  note  33  supra.  Also,  Garred  v.  Macey,  10  Mo.  161; 
Curiy  V.  Lackey,  35  Mo.  389;  Van  Cortlandt  v.  Underbill,  17  Johns.  (N.  Y.)  405. 

40  See  Smith  v.  Railroad  Co..  36  N.  H.  458;  (Jnderhill  v.  Van  Cortlandt.  2 
Johns.  Ch.  (N.  Y.)  339;  Leonard  v.  House,  15  Ga.  473;  Efuer  v.  Shaw,  2 
Wend.  (N.  Y.)  567;   Oakes  v.  Moore,  24  Me.  214. 


AICMIIKATION     AND    AWAIiD. 

•litTrn'Ucrs  from  nrisiiii:.  is  iml  i(';j;;ir(l('d  as  a  submission  to  arbi- 
Iiatioii."  Hut  tlir  mailer  iir.d  not  be  iuvolvt'd  in  a  jK'ntliii.u  sni(-/- 
it  is  siini.it'nt  iliai  it  br  ;uHi;ill\  (iispiiicd.  (ir  even  mncly  doubit'd.'-' 
It  u.r.l  lint  <(nisist  sdlrly  (»!'  (picslions  of  tact;  for  a  imic  <iiK\stiou 
of  law  may  W  submitted/*  (Jcncrally,  any  controversy  c-oncorning 
n-aP-'  or  in-rsonaP"  itropcrty  or  an  injury  thoroto*'  may  be  ad- 
just.-d  by  Mrbitralion.  While  crinruKil  matters  cannot  be  sub- 
mit i.-d.  a  eivil  .laiiii  fni'  dama.ues.  nr,,win-  out  of  an  act  punishable 
as  a  ciimr.  may  be  so  ailjiisled.'^    even  after  indictment.-'^ 

41  Stose  V.  Heisslor.  l:Jo  III.  a:\:\.  n   X.  i:.  1<)1;    Norton  v.  (,iale.  do  111.  533. 

«2  Titus  V.  Scantliiif,'.  4  lUaikf.  (Iiid.)  sii. 

«3  Hrowu  V.  Whcflcr.  17  Conu.  34.");  riiully  v.  Kay.  .">  .Tones  (N.  C)  12.j; 
Mayo  V.  (Janlner.  4  .Foiies  (N.  C.)  SoO;    Iliggins  v.  Kinuoaay.  20  Iowa.  474. 

**  Ching  V.  Vhiu'A,  0  Yes.  2S'2;  (Ireen  v.  Ford.  17  Ark.  5S(5;  Strawbridge 
v.  Fuustoue.  1  Walts  &  S.  (I'a.)  517;  .loncs  v.  Mill  Corp.,  tj  Pick.  (Mass.) 
14S:  Smith  V.  Thorndike.  S  (Jrecnl.  (Me.)  IIU;  Klcinc  v.  Catara,  '_•  Gall. 
Cil,  Fed.  Cas.  No.  7.8<r.t. 

*-CaIdw.  Aril.  1;  Morse,  Arb.  54;  Knight  v.  Burton.  G  Mod.  231;  Round 
V.  Hatton,  10  Mees.  A:  W.  (Jf.O;  McMullen  v.  Mayo.  8  Sniedes  &  M.  (Miss.) 
L".ts;  Jones  V.  Mill  Corp.,  G  IMck.  (Mass.)  148;  ("lark  v.  Burt.  4  Cush.  (Mass.) 
31m;;  Akely  v.  Ak«'ly,  Ki  Vt.  4.50;  SoUick  v.  Addanis.  15  .Johns.  (N.  Y.)  107; 
f'an-y  v.  \Yil<-ox.  G  .\.  II.  177;  Byers  v.  Yan  Dcnsen.  5  AYcud.  (N.  Y.l  2t;S; 
Mnnro  v.  Alairc  2  Caines  (N.  Y.)  .320;  Davis  v.  Havard,  15  Serg.  &  K.  (Pa.) 
nr.:  I'agf  V.  F(»ster,  7  N.  II.  3!rJ:  Hunter  v.  liict,  15  East,  100;  McCrackon 
V.  Chirke.  31  I'a.  St.  498;  Blair  v.  AYallaec,  21  Cal.  318.  A  dispute  as  to  a 
division  line  bt'tween  two  tracts  of  land  may  be  submitted.  .Tones  v.  Dewey, 
17  N.  H.  .5!«G:  Bowen  v.  C<K»per,  7  AYatts  (Pa.)  311;  Page  v.  Foster,  7  N.  11. 
:','.t2.  .\n  ariidn  of  fjcctuM-iit  iii:iy  be  rffcircd.  A.istin  v.  Snow's  Le.ssee,  2 
Dall.  157;  Harvey  v.  Suow.  1  Veates  (Pa.)  150;  Duer  v.  Boyd.  1  Serg.  &  R. 
(Pa.»  2n:;. 

4fl  See,  generally,  rases  cited  in  note  Mi.  supra.  Also,  Penniman  v.  Rodman, 
1.3  Mete.  (Muss.)  :'.82;  Muuro  v.  Alaire.  2  Caines  (N.  Y.)  .320;  MeMuUen  v. 
.Mayo.  8  Sniedes  A:  M.  (.Miss.)  208;    De  Long  v.  Stanton,  0  .Tohns.   (N.  Y.)  38. 

«:  Fiteh  v.  Ilydr.iidie  (',,..  44  .Mieh.  74.  t",  N.  W.  01:  I'ittli  v.  Talt,  12G 
Maxs.  .5o;5. 

♦  ■»  Morse,  Aril.  5:;;  B;ii<er  v.  Tnu  iislieiid.  1  .Moore,  iL'o;  Noble  v.  Pivbles, 
13  Serg.  &  U.  (Pa.)  310;  IJgou  v.  Ford,  5  Munf.  (Ya.i  lo.  See.  also,  Yates 
v.  Uusselj.  17  Johns.  (N.  Y.)  4G1;   IVt)ple  v.  Bishop,  5  \Yeud.  (N.  Y.)  111. 

♦  ■'Noble  v.  Peebles,  13  Serg.  \-    U.   (P;i.)  ;;10. 


THE    AltlilTHATOKS. 


THE  ARBITRATORS. 


4.  Any  one  having  no  concealed  interest  in  the  matter 
submitted  is  competent  to  act  as  arbitrator,  -whether 
legally  competent  to  contract  or  not. 

Tbe  arbitrators  are  the  persons  selected  as  jiid;;es  to  hear  and 
determine  the  controversy;  and  it  is  said  that  a  party  may  seh'ct 
whom  he  pleases  to  act  as  his  judge.'^''  Whatever  may  liavc  hccn 
the  rule  formerly/'^  it  is  now  well  settled  that  neither  infancy, 
idiocy,  Innacy,  coverture,  nor  any  other  natural  or  lej^al  disa- 
bility will  disqualify  a  person  to  act  as  arbitrator.""  Nor  will  a 
known  interest  in  the  subject-matter  of  the  submission. ''•*  But 
if  an  arbitrator  has  a  substantial  interest  in  the  controversy  not 
known  to  the  parties,  and  which  is  of  such  a  nature  that  it  mij^^ht 
affect  his  decision,"*  or  if  other  cirjumstances  tending  to  create 
prejudice  exist,  such  as  a  relationship  betw^een  the  arbitrator  and 
one  of  the  parties,  which  fact  is  not  known  to  the  other,  the  award 
may  be  set  aside  on  this  ground. °^  lUit  an  objection  to  an  arbi- 
trator because  of  any  interest  or  incompetency  known   lo  or  dis- 

&o  luiss.  Arb.  Ill;    Morse,  Arb.  99;    Yiu.  Abr.  "Arbitration,"  A,  2. 

51  Russ.  Arb.  Ill;    Com.  Dig.  "Arbitrament,"  C. 

52  Russ.  Arb.  Ill;  Bac.  Abr.  "Arbitration,"  D;  Huutig  v.  KnlliuiL,'.  8  Dowl. 
879;   Evans  v.  Ives,  15  Phila.  (Pa.)  635  (as  to  competency  of  married  woman). 

53  Fisher  v.  Towner.  14  Conn.  2(5;  Brown  v.  Loavitt,  2(5  Me.  2.")1;  Hubbard 
V.  Hubbard,  Gl  111.  228. 

54  Earl  V.  Stocker,  2  Vern.  251;  Rand  v.  Redington.  33  N.  II.  72;  In- 
habitants of  Leominster  v.  Fitchburg  &  W.  R.  Co.,  7  Allen,  38;  Spearman 
V.  Wilson,  44  Ga.  473. 

5  5  Brown  v.  Leavitt,  20  Me.  251;  Pool  v.  Ilennessy.  .39  Iowa.  192.  An  em- 
ploye of  one  of  the  parties  is  a  competent  arbitrator.  Howard  v.  Pensacola 
&  A.  R.  Co.,  24  Fla.  560,  5  South.  356.  An  alderman  is  a  competent  arbi- 
trator in  a  case  to  which  the  city  is  a  party.  Kane  v.  Fond  du  Lac.  40  Wis. 
495.  One  who  has  formerly  been  counsel  tor  the  successful  party  in  an- 
other case  is  not  thereby  disqualitied  to  act  as  arbitrator.  Goodrich  v.  Hul- 
bert,  123  Mass.  190;  Cheney  v.  Martin,  127  Mass.  304.  A  person  who  ha.s 
been  subpoenaed  as  a  witness  in  the  case  is  competent  to  act  as  an  arbi- 
trator. Temple  v.  Myers,  16  Pa.  Co  Ct.  R.  232.  Smckholders  in  a  bank 
which  holds  shares  of  a  railroad  company  pledged  it  as  collateral  security 
by  a  person  of  good  credit  and  fair  standing,  are  not  disciualifu-d  by  reason 


10  AKBITKATliKN    AM)    AWAIiD. 

loviTt'd  h\  ilu'  pariy  in  tho  c•()Ul•t^e  of  the  proceedings  may  be 
waived/'"  and  a  waiver  is  implied  from  failure  to  object  before 
I  he  award  is  made.''' 

i'lniiire  and  Third  Arbitrator. 

As  a  .irt  lural  rule,  the  parties  to  the  submission  each  select  an. 
;iil>inat(>r,  and  i;ive  to  them  the  \)0\\Qr  to  select  a  third  in  case  of 
disaiiret-mmt.  T'ais  third  person  is  called  an  "umpire."  Generally, 
uncU'r  such  a  submission,  the  arbitrators  need  not  wait  until  they 
have  actually  disagreed,  but  may  appoint  an  umpire  even  before 
( (.mmi-ncing  the  hearing.^**  The  appointment  may  be  by  parol, 
unk'ss  the  statute,  the  terms  of  the  submission,  or  the  nature  of 
ihi'  subject-matter  require  it  to  be  in  writing;^"  and  where  the 
parties  appear  before  the  umpire  without  objection  as  to  the  mode 
of  his  appointment  they  cannot  afterwards  raise  the  objection  that 
he  should  have  been  appointed  by  written  instrumeut.'^^  But  an 
uniiiire  cannot  be  appointed  by  parol  where  it  is  agreed  that  the 
Miliuiission  shall  be  made  a  rule  of  court.**^  Upon  the  disagree- 
iiR-nt  of  the  arbitrators,  it  is  the  duty  of  the  umpire  to  decide,  not 
merely  the  points  upon  which  the  arbitrators  have  failed  to  agree,, 
but  the  whole  controversy,  exactly  as  though  he  had  been  appointed 
sole  arbitrator  in  the  firs-t  instance.®-      He  should  hear  the  oral 

of  interest  from  acting  as  arbitrators  in  a  case  in  which  the  railroad  company 
is  a  party.  Inhabitants  of  Leominster  v.  Fitchburg  &  W.  K.  Co.,  7  Allen 
(Mass.)  38. 

"0  Brown  v.  Lcavitt.  2(>  Me.  251;  Davis  v.  Forshee,  o4  Ala.  107;  Fox  v. 
Hazeltou,  10  rick.  (Mass.)  275;  Dougherty  v.  Mc^^  norter,  7  Yerg.  (Tenn.) 
::.",!»:    strong  v.  strong.  D  Cush.  500. 

s"  Robb  v.  Brachman,  38  Ohio  St.  42^i;  Monongahela  Xav.  Co.  v.  Fenlou,  4 
Watts  &  S.  (Pa.)  205;  Fox  v.  Hazelton.  10  Ticlc.  (Mass.)  275;  Anderson  v. 
r.urchett.  48  Kan.  1.53.  29  I'ac.  315;   Brown  v.  I.eavUt,  2t!  Me.  251. 

&t>  Ale.xandria  Canal  Co.  v.  Swann.  5  IIow.  83;  Bigelow  v.  Mayuard,  4 
Cu.sh.  317;  Dudley  v.  Thomas.  23  Cal.  3(!5;  Newton  v.  West.  3  Mete.  (Ky.l  24; 
McKinstry  v.  Solomons.  2  .Johns.  (N.  Y.)  57;  Van  Cortlandt  v.  Underliill,  17 
.Fr.hns.  <.\.  Y.)  405;  Butler  v.  Mayor,  etc,  of  New  Y(irl<,  1  Hill  (N.  Y.)  480; 
I'eck  V.  Wakely.  2  McCord  (S.  C.)  27!»;  Woodrow  v.  O'Connci'.  28  Vt.  77(!;. 
Stevens  V.   Brown.  .S2  N.  C.  400. 

60  Morse.  Aili.  215;    Bryan  v.  .Teffreys.  104  N.  C.  242,  10  S.  E.  107. 

«»  Knowlton   V.   Iloniir,   ;'>0   Me.   552. 

ei  Klmendiirf  v.   Harris.   2.''.   Wind.   (.\.   Y.)   028. 

62  Bates   V.   Cooke.   0    I'.arn.    i^    C    loT:     M<I\insIry    v.    Solomons,    2  .Tolins. 


Tin-:    SUBMISSION.  1 1 

and  examine  the  dociinienlarj  evidence  in  the  case,  and  inil  rely 
solely  on  the  facts  reported  by  the  arbitrators."-'  The  awaid  is 
hia  act  alone;  the  joinder  of  the  other  arbitrators  therein  will  be 
rejected  as  surplusage."*  But  sometimes  the  submission  provides 
for  the  selection  of  a  third  person  in  case  of  disagreement,  and  sti[)- 
ulates  that  the  award  shall  then  be  by  concurrence  of  a  majority.  In 
such  a  case  the  third  person  is  not  an  umpire,  but  a  thiid  arbitra- 
tor, charged  with  the  same  duties  and  vested  with  the  same  powers 
as  a  member  of  the  original  board."* 

THE  SUBMISSION. 

5.  The  submission  is  the  contract  between  the  parties  to 
refer  the  dispute  and  abide  by  the  award  of  the  ar- 
bitrators.^*    It  may  be — 

(a)  At   common  law;  either   oral,  or  by  written  instru- 

ment with  or  without  a  seal. 

(b)  Under  the  statute;  in  which  case  the  form  and  exe- 

cution of  the  contract  must  comply  with  the  statu- 
tory provisions. 

(N.  Y.)  57;  Shields  v.  Renno,  1  Overt  (Tenn.)  313;  Passmore  v.  Pettit,  4  Dall. 
271;  Crabtree  v.  Green,  8  Ga.  8. 

6  3  Taber  v.  Jenny,  Spr.  315,  Fed.  Gas.  No.  13.720,  Falconer  v.  Montgomery. 
4  Dall.  232;  In  re  Grening,  74  Hun,  G2,  26  N.  Y.  Supp.  117;  Passmore  v. 
Pettit,  4  Dall.  271;  Daniel  v.  Daniel,  (J  Dana  (Ky.)  93;  Small  v.  Courtney,  1 
Bred.  (S.  C.)  205;  Ingraham  v.  Whitmore,  75  111.  24;  Gaffy  v.  Hartford 
Bridge  Co.,  42  Conn.  143;  Alexander  v.  Cunningham,  111  111.  511.  But  see 
Sharp  V.  Lipsey,  2  Bailey  (S.  C.)  113;   Graham  v.  Graham,  9  Pa.  St.  254. 

04  Kile  V.  Chapin,  9  Ind.  150;  King  v  Cook,  Charlt.  (Ga.)  286;  TvUt  v. 
Webb,  10  B.  Mon.  (Ky.)  123;  Rigden  v.  ilartin,  6  Har.  &  J.  (Md.)  403; 
Frissell  v.  Fickes,  27  Mo.  557;  Boyer  v.  Aurand,  2  Watts  (Pa.)  74;  Risen 
v.  Berry,  4  Rand.  (Va.)  275;  Shields  v.  Renno  1  Overt.  (Tenn.)  313;  Haven 
V.  Winnisimmet  Co.,  11  Allen  (Mass.)  377;   Ingraham  v.  Whitmore,  75  111.  24. 

6  5  Keade  v.  Dutton,  2  Mees.  &  W.  69;  Lyon  v.  Blossom,  4  Duer  (X.  Y.i 
318;  Willis  v.  Higginbotham,  61  Miss.  164:  Mullins  v.  Arnold,  4  Sueed 
(Tenn.)  262;  Battey  v.  Button,  13  Johns.  (N.  Y.)  189;  Bassett  v.  Cunningham. 
9  Grat.  (Va.)  684;  Rison  v.  Berry,  4  Rand  (Va.)  275;  Haven  v.  Winnisimmet 
Co.,  11  Allen  (Mass.)  377;  Gaffy  v.  Hartford  Bridge  Co.,  42  Conn.  143; 
Quay  V.  Westcott.  60  Pa.  St.  163. 

GO  That  agreements  to  submit   to  arbitration    will   not   be   specifically    en- 


1-J  AUIUTIIATION     AM)    AWAlU). 

Commun-lAiic  Submimons. 

Snhiuissions  at  conimon  law  arr  lilxM-ally  constiau'il,  tlie  inten- 
linii  of  tlio  parlii's  bciiii:  tin-  (•ontrolliiijj;  I'lcniciit."'  The  form  of 
ihc  aj,M-c('nu'nl  must  Im-  ^oNorncd  lai-f;ely  by  the  subject-matter, 
'riif  subuiissidu  and  tlu'  awaid  have  the  general  etTect  of  a  siui?le 
(•(•niiact  bi'twei'U  tlie  jtarties; ''■''  and  tlicrcfon'  it  may  be  said  that 
a  verbal  submission  will  be  valid  when  the  subjeet-matter  is  such 
that  a  vi'i-bal  aiiri-cmcnl  between  the  parties  in  the  terms  of  the 
award  would  be  valid;  but  if  the  statute  of  frauds  would  require 
such  a  contraet  to  be  in  writing,  or  by  sealed  instrument,  the  sub- 
mission and  award  must  be  of  corresponding^'  di<;nity/''  Thus  a 
subnnssion  alTcctiiiu  (he  title  to  real  estate  must  be  under  seal;'" 
but  any  other  question  relative  to  land,  such  as  a  claim  for  rent,'^ 
a  lontrovei'sy  as  to  the  price  to  be  paid  for  a  certain  tract,^-  a  claim 

lorft'd.  see  Clark,  Contracts,  432,  and  cases  there  cited.  The  following  cases 
are  also  iu  point:  Keeffe  v.  National  Ace.  Soc,  38  N.  Y.  Supp.  854;  McGunn 
V.  llanlin.  2\)  Mich.  47G;  Corbin  v.  Adams,  76  V'a.  58;  King  v.  Howard,  27 
Mo.  21;   Copper  v.  Wells,  1  N.  J.  Eq.  10. 

«■  Wilson  V.  Getty,  57  Pa.  St.  20G;  Bradj^  v.  Mayor,  etc.,  1  Barb.  (N.  Y.) 
584;  Gerrish  v.  Ayers,  3  Scam.  (111.)  245;  Kimball  v.  Walker,  30  111.  482; 
Ross  V.  Watt,  IG  111.  9i);  X(>l)le  v.  Peebles,  13  Serg.  &  R.  (Pa.)  319;  King  v. 
Jemison.  33  Ala.  499;  Valentine  v.  Valentine,  2  Barb.  Ch.  430;  Ilopson  v. 
iMxlittk',  13  Conn.  23G.  The  stipulation  should  fix  the  number  of  arbitrators 
and  the  mode  of  their  selection.  Greiss  v.  Insurance  Co.,  98  Cal.  241,  33 
I'ac.  19.5. 

"^  See  Russ.  Arb.  .53;  Walters  v.  Morgan,  2  Coj^,  Ch.  3G9;  Ballauce  v.  Un- 
derhill.  3  Scan).  (111.)  453;  Stone  v.  Atwf>od,  28  III.  30.  From  the  fact  of  sub- 
mission, the  law  always  implies  an  agreement  to  abide  by  the  award.  Valen- 
tine v.  Valentine,  2  Barb.  Ch.  430. 

«»  Morse,  Arb.  51.  And  see,  gencr.illy,  'I'lioiuasson  v.  Risk,  11  Busli  (Ivy.) 
i\\U:  Smith  V.  Douglass,  Ki  111.  :M:  Mm  tin  v.  Ciiapm;in,  1  .\la.  278;  I'hil- 
l.rick  V.  Pn-hl".  IS  Me.  2.55;  Si.nks  Heirs  v.  Caiuiady,  3  Litt.  (Ky.)  ;J99; 
I'li<-i]is  V.  Duliiii,  75  HI.  9ii;  I.();:s(l()n  v.  Uulterts'  K.\''-s,  3  'i.  B.  Mon.  (Ky.) 
2.55;  Byrd  v.  odem,  9  .Ma.  7.55;  Dilks  v.  Ilaiiunorid,  SG  Ind.  5G3;  Donnell 
V.  Lee.  .58  .Mo.  App.  288;  Mc.Mulli'ii  v.  May(-  8  Sin.-dcs  &  M.  (Miss.)  29S. 
'I'lie  siilMnlssion  of  a  ix'iidiiig  suit  iii;iy  he  hy  ]);ir<>l.  Wells  v.  L;ine,  15 
W.n«l.  99. 

•••MorKO.  ,\rl».  55;  Mill.r  v.  ( ;r;iliiiiii,  1  I'.ii'\.  (.s.  (\i  4IS:  Stark's  Heirs 
V.  Cnimady.  3  Lilt.  (Ky.i  :t99;    Hodges  v.  S.iiiiidi  is.  17   Pick.  470. 

-I  PciiJx.dy  V.   Rice.  li:',  M.-iss,  :;i. 

"-  I»:ivy  V.  I'nw,  7  riMinIi,   172;    \\i'st<iii  v.  Slu.-irl,  2  I';iirl".  (Me.)  '.VM. 


Till':  suimissioN.  13. 

for  dama^a^s  growing  out  of  a  contract  relative  to  land,"'  may  1)(- 
submitted  bj  parol. "^  Where  a  submission  is  first  made  by  parf.U 
but  is  followed  by  another  in  writing,  llic  second  suiwrsf'th-s  the 
first, '^  even  though  it  jtrovidcs  lor  a  (lilTcrcnl  niinihcr  cd'  ;irbih-;i- 
t()rs.'° 

SiaiiUory  Submissions. 

While  there  is  a  tendency  towards  a  liberal  construction,  in  many 
particulars,  of  statutes  governing  arbitrations,"'  a  statutory  submis- 
sion, so  far  as  concerns  its  form  and  execution,  must,  as  a  rule, 
conform  strictly  to  the  terms  of  the  statute.  Such  submissions 
are  generally  required  to  be  in  writing,  sometimes  under  seal,  and 
acknowledged  before  a  justice  of  the  peace  or  other  officer.  The 
statute  usually  provides  for  giving  effect  to  the  award  by  entry 
of  judgment  upon  it;  and  it  is  said  that  the  jurisdiction  of  the  arbi- 
trators to  make  an  award  upon  which  the  court  can  render  judg- 
ment is  "a  special  jurisdiction,  created  entirely  by  the  statute,'* 
and  can  be  sustained  only  by  a  full  compliance  with  the  statutory 
provisions.'^^  But  statutes  authorizing  and  regulating  submis- 
sions, and  prescribing  the  mode  by  which  the  award  may  become  the 
foundation  of  a  judgment,  and  enforceable  as  such,  generally  da 
not  abrogate  the  common-law  practice  of  arbitration.'"      The  par- 

T3  Carson  y.  Earlywine,  14  Ind.  2o(i. 

74  A  general  submission  of  "all  matters  in  dispute"  between  tlie  parties 
will  embrace  questions  relating  both  to  real  and  lo  personal  propert:k'.  Munro 
Y.  Alaire,  2  Caiues  (N.  Y.)  320;  Sellick  v.  Addams,  15  .Tohus.  (X.  Y.)  197. 
And  involves  a  submission  of  both  the  law  end  the  facts.  Indiana  Cent. 
R.  Co.  V.  Bradley.  7  Ind.  49;  riank  v.  Mizel)  (Pa.  Com.  PI.)  11  Pa.  Co.  Ct. 
R.  670. 

7  5  Symonds  v.  Mayo,  10  Cush.  (Mass.)  39. 

7  6  Loring  v.  Alden,  3  Mete.  (Mass.)   .570. 

7  7  See  Morse,  Arb.  47,  and  cases  there  cited. 

7s  Abbott  V.  Dexter,  6  Cush.  108;  Francis  v.  Ames,  14  Ind.  251;  Weiuz  v. 
Dopier,  17  111.  Ill;  Moody  v.  Nelson,  GO  111.  229;  Gibson  v.  Burrows.  41 
Mich.  71.S,  3  N.  W.  200. 

79  Martin  v.  Chapman,  1  Ala.  278;  Byrd  v.  Odem,  9  Ala.  755;  Carson  v. 
Earlywine,  14  Ind.  2.5(j;  Titus  v.  Scantling.  4  Blaclcf.  (Ind.)  S9;  Torrance  v. 
Anisden,  3  McLean,  .509,  Fed.  Cas.  No.  14,103;  Overly's  Ex'r  v.  Overly's  Dev- 
isees, 1  Mete.  (Ky.)  117;  Brown  v.  Kincaid,  Wright  (Ohio)  37;  Howard  v. 
Sexton,  4  N.  Y.  157;  Pierce  v.  Kirby,  21  Wis.  125;  Peachy  v.  Ritchie,  4  CaL 
205;   Giles  I>.  &  L.  Printing  Co.  v.  Recaimer  Maxiuf'g  Co.,  14  Daly.  475. 


]|  AKUrrUATION    AM)    AWAIU). 

tirs  iiuiv  -m.-nillv  s.lc.-t.  :il  ili.-ir  i>\^\um,  cilli.T  tli.>  stalutory  or  tho 
vi.umn.n  law  ukmIc;  and  if  tlu-  suhiuissicu,  protccdin^'s.  and  award 
;uv  .^un'uirut  wlu'U  l.sl.'d  hv  the  nil.-s  ..f  the  conunon  law,  althou-ih 
not  in  (•(.nfonnily  with  Ww  sialulc.  ihc  award  will  !..■  -ivcn  clTcct 
;is  a  »oniin..M  law  award/"  \U\{  wh.'ic  it  dearly  ai.itcars  that  a 
statutory  ailiilration  was  intended,  the  submission  and  i)roceedinjj;s 
\\ill  -.■net-ally  he  jnd^'ed  hy  the  statute;  and  any  siihstantial  i\e- 
jiarture  ffoin  its  iH)sitivc'  f.iiuirenienis  will  be  fatal  to  the  validity 
ttf  the  awanl/^ 

REVOCATION. 

6.  Either  party  may  revoke   the   submission    at  any  time 
before   the   award   is    made.     The    revocation   may 
be— 
(^a)  Express,  either    oral    or   written,  as    corresponds  to 

the  submission;  or 
(b)  Implied  from  circumstances,  or  the  acts  or  condition 
of  the  parties. 

Exprcj<s  Reiocolion, 

Tniess  denied  by  statute,  the  right  of  express  revocation  exists 
-enerally   as   to   all   subinissious  "^^   except   such   as   have  actually 

>"<  W.'iiiz  V.  Diipler,  17  ill.  HI;  C<J<»k  v.  Schroodor,  55  111.  5:5(i;  Fasoninoycr 
V.  Sauti-r.  77  111.  515;  Titus  v.  Sciintling.  4  Blackf.  (Ind.)  80;  Moore  v.  Hnr- 
m-tt.  17  Ind.  -M'J;  Cli'iin-nt  v.  Comstork.  2  Mich.  :V,'.):  McCunu  v.  IlMiilin. 
ir.»  Mich.  47<;;  (Jallowuy  v.  (Jibsou.  51  Mich  135,  It;  .\.  W.  :U0;  Williimhain 
V.  Ilarrt'll.  :i<i  Ala.  5.SS;  'Ix  1.  r  v.  Dyer,  13  Mc.  41;  Fink  v.  Fink.  8  Iowa.  312; 
(■r.nK'tT  V.  Dciin,  3  Iowa.  4<,;;;  Dockcry  v.  Randolph  (Tex.  Civ.  App.)  30  S. 
\V.  270;    Wilkes  v.  Colter.  28  Ark.  51'.). 

-1  Jloldrid^*'  V.  Stowell.  :'.!!  Minn.  'M'tU.  40  N.  W.  2.5!);  Wesson  v.  Newton, 
10  Cush.  (.Mass.)  114;  Deeili«'ld  v.  Arms,  20  Pick.  (Mass.)  480;  Haniilton  v. 
llanillton.  27  111.  15.s;  Winne  v.  Flderkin.  1  ('hand.  (Wis.)  21lt;  Coi)e  v.  (lil- 
I..Tt,  4  IH'nio  (N.  Y.)  :i47;  Kslep  v.  I.arsii.  K!  Ind.  82;  Howes  v.  French.  2 
l"alrf.  (.Me.)  182;  Tierce  v.  Kirliy,  21  Wis.  125;  Fiands  v.  Ani.-s,  14  Ind.  251; 
ThonipMon  V.  Seay  (Tex.  Civ.  App.)  2(1  S.  W.  81)5;  Ahbott  v.  D.  xter.  (!  Cush. 
•  MahH.)  108;  Allen  v.  Chase.  3  Wis.  24!);  Conner  v.  I). -an.  :;  Iowa.  Ki:*.;  Frie 
T.l«-Kniph  &  Telephone  Co.  v.  Hent.  :i!»  Fed.  loit.  Tli.-  statute  must  lie  <om- 
pU.-d  with  as  to  tlie  number  i»f  arbllraloi-s.  Ciii.k.i  iii--(  base  I'.i^^s.  Co.  v. 
I»e   Veil.   .55   111.   App.  442. 

••-•  .Milne  V.  <;nitrix.  7   lOasI.  oos;    Vynioi's  Case,  8  Coke,  .so.i;    I.i-un.ird   v. 


HKV(  (CATION.  15 

been  mado  a  rule  of  courl ;  ■*■'  innl  ii  .miiik.i  he  (l..f,.:i(.<|  l,\  ;i  si ij. il- 
lation in  the  subniission  ihiit  ii  shall  \u-  iin-vocaliir.- '  WIi.-iIkt 
the  at;i-('('nu'nt  to  siilimil  !»(•  uiidri-  seal  (n-  liv  parol,  th.-  li^ilii  lu  if. 
yoke  is  the  same;  hiil  the  icvcx  at  ion  nmst  !»<•  (»f  al  Icasi  ((jiial 
dij-nity  with  tlie  subniission.  It  iln-  sultiiiissiou  lit-  in  wiiiin;:.  iIm* 
revocation  must  also  be  in  writing;  '"'  it  under  seal,  it  can  In*  re- 
voked only  by  a  sealed  instrument. "*"  As  Die  submission  is  in  every 
sense  a  contract,  of  course  the  party  revoUin;^^  il  tlicrcliy  n-nders 
himself  liable  to  the  other  for  resulting  damages."'  The  right  of 
revocation  ceases  upon  the  making  and  publishing  of  the  award. ^'' 

House,  15  Ga.  47:3;  Allen  v.  Wat.son,  KJ  .Johns.  (\.  Y.)  20.1;  Aspinwall  v. 
Tousey,  2  Tyler  (Vt.)  [i'2S;  .Jones  v.  Harris,  oii  Miss.  214;  Marsh  v.  racker, 
20  Vt.  198;  Erie  v.  Tracy,  2  Grant  (Pa.)  20;  Johnson  v.  Andress,  7,  I'hila.  (Va.) 
8;  Peters'  Adm'r  v.  Craig,  6  Dana  (Ky.)  307;  Toljcy  v.  lirislol  Co..  ;{  Story. 
800,  Fed.  Cas.  No.  14,005;  Bank  of  Monroe  v.  Widiier,  11  Pai^'e  (\.  V.i  .-,2!): 
Donnell  v.  Lee,  58  Mo.  App.  288;  Oregon  i:  \V.  Mortg.  Sav.  J'.:ink  v.  Aim-ri- 
oan  Mortg.  Co.,  35  Fed.  22. 

83  Dexter  v.  Young,  40  N.  H.  130;  Huston  v.  (  lark,  12  I'liila.  (Pa.)  lis:]; 
Haskell  v.  Whitney,  12  Mass.  47;  Tyson  v.  Koliinson,  :;  Ired.  (X.  C.i  .•;:;:;; 
Pollock  v.  Hall,  4  Uall.  222;  Sutton  v.  Tyrrell.  10  Vt.  !)1 ;  Bray  v.  lOnglisii. 
1  Conn.  498;  Masterson  v.  Kidwell.  2  Cranch  C.  C.  070.  Fe<l.  Cas.  .\n.  9.209. 
Compare  Green  v.  Pole,  G  Bing.  443;  Bank  of  Monroe  v.  Widner,  11  I'aigo 
(N.  Y.)  529. 

84  See  cases  cited  in  note  82.  Also,  Davis  v.  Maxwell,  27  Ga.  308;  Power 
V.  Power,  7  Watts  (Pa.)  205;  Shroyer  v.  Bash,  57  Ind.  .349.  A  stipulatiin  in 
the  submission  that  if  either  party  fails  to  appear  the  arbitrators  may  pro- 
ceed ex  parte,  does  not  render  the  submission  irrevocable.  Boston  A:  L.  U. 
Corp.  V.  Nashua  «&  L.  K.  Corp.,  139  Mass.  403,  31  N.  E.  751. 

8  5  Sutton  V.  Tyrrell,  10  Vt.  91. 

86  Wallis  V.  Carpenter,  13  Allen  (Mass.)  19;  McFarlane  v.  Cushman.  21 
Wis.  401;  Brown  v.  Leavitt.  2(5  Me.  251;  Mullins  v  Arnold,  4  Sneed  (Tenn.) 
262;  Howard  v.  Cooper,  1  Hill  (N.  Y.)  44;  Van  Antwerp  v.  Stewart.  8  Johns. 
(N.  Y.)  125. 

87  Brown  v.  Leavitt,  20  Me.  251;  Rison  v.  Moon,  91  Va.  384.  22  S.  E.  105; 
Hawley  v.  Hodge.  7  Vt.  237;  Dexter  v.  Young,  40  N.  H.  130;  Craftsbury  v. 
Hill,  28  Vt.  703;  Miller  v.  Canal  Co..  53  Barb.  (N.  Y.)  590;  Pond  v.  Harris. 
113  Mass.  114;   P^rets  v.  Frets.  1  Cow.  (N.  Y.)  335. 

88  Macarthur  v.  Campbell,  5  Barn.  &  Adol.  518;  Kiiowltou  v.  Homer.  30 
Me.  .552;  Clement  v.  Iladlock.  i:!  X.  II.  185;  Coon  v.  Allen.  1.50  Mass.  113. 
80  N.  !•:.  83;  Hunt  v.  Wilson.  0  N.  II.  30;  Tobey  v.  Bristol  Co..  'A  Story.  SOO. 
Fed.  Cas.  No.  14,065;  Musselbrook  v.  Dunkin,  9  Bing.  605.  See  Bank  of  Mon- 
roe v.  Widner.  11  Paige  (N.  Y.)  529. 


lU  AIMUIKATION     AND    AUAKl). 

Ill  rasr  »if  siaiulorv  siilniiissioiis,  ilic  cxcrfisc  of  the  powiT  of  rcvo- 
liiiioii  is  limitcil  jiiul  conii-olltd  h\  {hv  staiiitc."'  Tlic  iwofatiou 
iiiiisi  Ik'  altsoluti'  and  uiifoiiditioiial,""  and  it  will  not  bccoiiio  opcr- 
alivr  until  noiicc  llicicof  is  .ui\cn  to  tlir  arliilraiors."  No  si>c<'ilic 
form  of  words  is  ro(|uii('d.  Any  words  wliich,  when  lilicfally  cou- 
siinrd.  «lis(los«'  an  inimiion  to  icxoki-  the  jiowii-  of  ilio  arbitratois, 
u  ill  111-  lu'ld  sullitii-nt.''- 

Iinplicd  Jxccocdtioii. 

A  rt'vocation  icsidls  liy  iinjilitaiioii  or  opi-ration  of  law  from  any 
ai-t  or  fii-c-unislau(.-f  wliith  n-udt'rs  llic  conliiiuanee  of  llie  proceed- 
ings le^^ally  or  aelually  impossible.  Tims,  unless  The  submission 
provides  aj,'ainst  sueli  a  eontin^icmy,  the  death  of  au  arbitrator/^ 
or  of  a  party.''  tir  tlio  rol'iisal  of  an  arbiiiator  to  proceed/'^  or  the 
iuarriaj,'e  <if  a  female  jtarly  where  surli  marriage  destroys  her 
tontnd  oM-r  the  subject-matter  of  the  submission,'-"^  or  the  brin^^in;; 
of  a  suit  on  the  disputed  matter  pendinj^-  the  arbitration, '■''  will 
aniounl  to  a  revocation.      J5nt   the  bankruptcy  of  a  parly  does  not 

h'-"  S«L'  HlooiiHT  V.  .^luTiimii,  5  I'ai^'c  (N.  Y.)  7j~7>;  Carey  v.  Coininissiouers, 
I'J  Oiiio.  1'4.">;    Slu-.i.vcr  V.   Ha.sli,  .".7   Iu<l.  .j4'J. 

uu  (Joodwiiif  V.  Miller,  '.','2  liid.  41U;    Steere  v.  lirowiiell,  llo  111.  41."). 

"1  Alleu  V.  Watson,  1(J  .Johns.  (N.  Y.)  liUo;    liinwii  \.  Leavitl,  I'tJ  Me.  251. 

i»2  Frcis  V.  Frets.  1  Cow.  (N.  Y.)  3:i.">. 

i-a  Sutton  V.  Tyrrell,  10  Vt.  'Jl;    I'otter  v   Stern  it.  i:4  I'a.  St.  411. 

■-•*  liailey  V.  Stewart,  :;  Watis  tV  S.  (I'a.i  .".(in;  I'ower  v.  Power,  7  W.ilts 
I  I'a.)  20.".;  (;n';.'ory  v.  Trust  Co.,  'M  FeU.  40S;  TyK-r  \.  .Jones,  3  Karii.  A:  C. 
144;  Ty.sou  v.  IJoitinsoii,  :!  Ired.  <N.  C.)  33:5;  Wliltlield  v.  Wbitlieltl,  8  Ired. 
(N.  C.)  HhJ;  Marselll.s  v.  I-Ceiitnn's  Kx'rs.  17  I'a.  St.  23S.  See  Freeborn  v. 
iM'iiuiiin,  .H  N.  .1.  J.aw.  11<,.  Where  j.  tiustee  of  an  express  trust  lor  the 
ni.-inai;enient  of  leal  i-staie  t.ikes  out  a  policy  of  lusuranee,  aud  a^roes  to  sub- 
mit the  aniount  of  lo.s.s  to  arbitration,  tlie  sul)ndssiou  is  not  revoked  by  his 
di-:ith   l»efore  award.    Citizens'    Ins.   Co.  of  lOvansville  v.   Coit.   I'J  Ind.   App. 

n;i.  3'j  N.  i:.  7<;«;. 

"s  Duiiuell  V.  L<H',  ."»N  .Mo.  Ajtp.  L'NN;  IJely<;i  v.  Kanis.iy,  2  Wend.  <;ii2;  Wil- 
Kon  V.  Cnms,  7  Watts  (I'a.)  VX>;  Crawshay  v.  ('olliiis.  ;'.  Swaiist.  :mi;  Ciiap- 
nian  v.  Seecomb,  3i!  .Me.  KrJ. 

i"5<'oiii.  I)i;j.  "Arbitrament."  1 »,  .'.;  Ch;nnh-y  v.  Wiiisi.inley,  ')  Fast,  'JtHi; 
Siiiiuii  V.  Tyrrell,  lo  \l.  '.»1 ;   .\biiolt   v.  K<-itli.   It   \\.  .'.•J.".. 

KM'etiTs'  Adm'r  v.  rinlir,  <;  I>aii!i  (Ky.i  ;;(i7;  I'liulsi-n  v.  M.-iiiske,  21  III. 
App.  'Jo;  Klmlmll  v,  Cilm.in,  (JO  N.  U.  :.l.  IJul  sec  Sutton  v.  Tyrndl,  lo  Vt. 
•Jl. 


IMIOCKEDINGS.  17 

have  tliat  cffccf.'"^    nor  doc-^   Ihc  d.-nili   of  a   [Kiily   wli.-if   llic  siih- 
mission  has  been  made  a  rule  (if  ((nirM/'" 

PROCEEDINGS. 

7.  The  mode  of  conducting  the  reference  is  left  lar(?ely  to 
the  discretion  of  the  arbitrators,  subject  to  the  re- 
quirement that  all  proceedings  shall  be  fair  and 
just  to  both  parties.  The  following  are  essential 
features : 

(a)  Notice    of   the   meetings   of  the   arbitrators    for   the 

hearing   of  evidence   must  be  given   to  each  party, 
unless  waived. 

(b)  Each  party  must  be  given  an  opportunity  to  present 

evidence  and  argument  in  support  of  his  own  case, 
and  to  be  present  w^hen  his  opponent  is  heard. 

(c)  All  competent  and  material  evidence  offered  by  either 

party  should  be  heard;  but  it  is  for  the  arbitrators 

to  determine  its  competency  or  materiality, 
(d.)  The   arbitrators   must  act  jointly  and   in   person    at 

every   stage   of  the   proceedings,  unless   otherwise 

provided  by  the  submission. 
(e)  All  proceedings   must   end   with  the   making  of  the 

aw^ard. 

As  to  the  proceedings  generally  in  a  common-law  arbitration  the 
law  prescribes  no  formality.  If  the  investigation  is  conducted  fully, 
fairly,  and  without  prejudice,  the  arbitrator  may  select  his  own 
method.  The  essential  features  of  the  proceedings  as  above  out- 
lined need  but  little  explanation.  A  hearing  is  indispensable  un- 
less waived,  and  an  award  made  from  the  arbitratm-s'  personal 
knowledge  or  ex  parte  investigation  of  the  case  is  void.""'      Each 

88  Andrews  v.  ralmcr,  4  Barn.  &  Aid.  250;   Snook  v.  Hollyor.  2  Chit.  4.'}. 

00  Bacon  v.  Crandon,  15  Pick.  (.Mass.)  79;  Freeborn  v.  Dennian.  S  X.  J. 
Law,  116;  Moore  v.  Webb,  6  Heisk.  (Tonn.)  301.  See,  also,  Bash  v.  Christian^ 
77  Ind.  290. 

100  Billings  v.  Billings.  110  Mass.  225;  Wiberly  v.  Matthews.  91  N.  Y.  (WS; 
Hartford  Fire  Ins.  Co.  v.  Bonner  Meic.iutile  Co..   44   Fed.    l.'.l.    Waiver  of 

ARB.  &  AWARD— 2 


>  MUirrU  V  I  1<»N     AM)     AWAHD. 

i»;mM\  iv  ••iitiil<"l  i<»  iiiiii.f  (if  ilu'  tiiiK'  Mini  itlmc  (if  the  hearing'; 
i\\n\  (iiiiih-stoii  III  ;;i\f  ii.  if  imt  \v;ii\ cd.'"  is  f;it;il  iti  I  lie  award.""' 
lint  uotitM"  nri'd  iiol  !«•  ;;ivrii  cif  iiicfliii;,'s  df  the  ai  liii  i  aims  (itlwr 
than  tluisr  for  iIm-  licarin;;  of  cvidciuM'.'"''  Tlir  luarinu  mnsi  lie 
in  tin-  iufscncr  (if  Imili  paiiics  nnlcss  lliis  ii;.'ln  is  \\ai\<(l.""  'I'lu' 
t'Xaniinalitin  of  a  uinnss  in  ilu-  absence  of  a  pail.v,  and  willioiit 
hS  kno\vIed;,'e  an«l  conseni.  or  I  lie  receiilion  of  informal  ion  fi-oni 
one  of  the  paities  in  ilie  aliseiice  of  the  oilier,'"'  is  >-n(li  an  in-e^- 
ciiariiv  as  \\ill  invaii<iaie  llie  llldl•(•l•din^^s.""'       As  to  the   retcjilion 

hcariim  will  not  In-  iircsuiiicd.  It  imist  be  sluiwii  by  uiUMiiiivocal  piMof.  Al- 
exuudor  V.  ('niiiilnKliaiii,  111  111.  'ill. 

101  Xt'\vt«in  V.  West.  :{  .M.-ic.  (Ky.)  124;  Wlililnck  v.  Lcdfnr.l.  vj  Ky.  olMt; 
Kanknk<-«>  A:  S.  U.  r.i.  v  Alfrt-d.  3  111.  Apii.  .'ill;  Stiockcy's  Adiirr  v.  Glas- 
fonl.  t;  I>ana  (Ky.)  It;  Madisini  lius.  Co.  v.  Crittin,  'd  lud.  L'TT;  Kane  v.  City  of 
r.iiul  du  Lac.  4n  Wis.  41»r.;  Tike  v.  Stallin;,'s,  71  (Ja.  SCO.  And  a  waiver  of 
ii.itlcc  will  not  be  readily  prcsuincd  from  the  conduct  of  the  parties,  especial- 
ly when  there  Is  evidence  which  prevents  the  court  frouj  iiidulu'lnj;  pre- 
siniiptions  wliolly  In  favor  of  the  award..  Warren  v.  'J  insley.  ;;  ('.  ('.  A.  tii:'., 
M  Fed.  tiS'X 

loa  Khneiidorf  v.  Harris,  li."!  Wend.  f.JN;  Crimes  v.  Brown.  11.'.  N.  C.  l.">4. 
is  S.  K.  ST:  Snmll  v.  Courtney,  1  Hrev.  (S.  C.»  U05;  Thornton  v.  Chapman.  2 
Cninch.  C.  C.  *J44.  Fed.  Ca.s.  No.  VS.'Ml;  Walker  v.  Walker,  28  (hi.  14m:  Fal- 
coner v.  .Mont^,'onle^y,  4  I>all.  232;  luyraham  \.  Whitmore.  To  111.  21:  Ki;,'den 
V.  .Martin.  <!  liar.  &  J.  (Md.)  4n;{.  N(itic(-  must  lie  >,'iv.M.  even  thouu'h  the  sub- 
mlssli  n  Ik  Kllent  as  to  notice.  Slilvely  v.  Knoblock.  M  Ind.  App.  A'X\.  'ATt  N.  i:. 
1U2X.  Hut  where  a  party,  kimwiim  that  the  referee.  witho\it  ;:iviii;,'  notice 
t<»  lilni.  has  made  an  e.x  parte  investiuatiou  of  the  case,  allows  the  hearing  to 
j.r<K'«'<Ml  without  olijectlnii.  he  thereby  waives  tile  IrrcK'nlarlty.  Diickworili 
V.  DIkk'Ich,  I'M  .Mass.  .'il.  2;»  .\.  !•:.  221.  See.  .-ilso,  Fox  v.  II:izelton,  10  IMck. 
CMaHH.i  27.'».  And  ILxluk'.  I"  the  presence  of  the  jiartles.  a  time  f.ir  th..  lu'ar- 
InK.  Ik  KUfllcient  notice,  If  the  hearing  is  had  at  the  time  so  llxed.  Ito.x  v. 
C<»««ie|l(i.  «;  .Misc.   Hep.  41."i.  27  N.   Y.  Supp.  2'.i:{. 

i"5  .Miller  V.  Kennedy.  :'.  Hand.  (Va.i  2;   /ell  v.  .I.liiisinii,  7i;  .\.  C.  .'.02. 

104  Ftllc«iiier  V.  .Montgomery.    I   hall.  2.:2;    (  itiziiis*   Ins.  Cci.   v.   I  lamill.ui.  4S 

III.  Api»  .'4»;i. 

>"'■  In  n-  CreKKon.  !'•  Coke.  408. 

«"«  hiKnihiim  v.  Whitmore.  7r»  III.  21;  KImetido.-f  v.  II:irris.  2.'?  Wi-iid.  (.\. 
Y.J  C2H:    Lutx  V.    Mnlhlcum.   S   Tel.    17S;     Ilairner   v.    .Mus;:nive.    1    D.ill.   s:\: 

'  Itaplla  T.  Klrwan.  1  Pall.  20i:    MuIIIim  v.  .Xiiiuid,  j  .si 1  (Temi.i  2t!2:    Mc 

Klnney  v.  FaKe.  .'12  .Me.  .'!.'{.  Hut  It  Ih  ii"  iibjictini,  ihril  the  :irbiir!itiirs  took 
ndvlee  relative  to  the  ({UeHtlonH  before  them  If  they  decided  on  their  OWU 
;udtrnHMit.    Klmoim  v.  MIIIm.  HO  Cal.  lis.  22  l'a(    2V 


PKOCKKOINGS,  19 

111"  cN  idciicc,  tlif  ;iil»ilr:il(ir  is  iioi  IhiiiihI  \,y  the  sliiii  rules  of  law. 
lie  iiiiiv  cxMiiiiiH'  wiliirssH-s  ill  I  cifsi  «m|  ill  (lie  fvi'iit  of  ihi'  hiiii.  ami 
\\\\(t  would  be  inc<mi|)<'i('nf  in  a  cniiri  of  law.'"'  Il<-  is  tin-  Hole 
jiid^c  of  lilt'  admissiliilii  \  of  llic  I'Nidincc  olfi-ri-d.'  and  lii.H  df 
cisioii  is  liiial.  I'.nt  w  li.ic  it  apfM-ars  thai  tin-  txrliiHion  of  »'vi- 
di'Mcc  is  iioi  the  icsnil  of  (iir  a  iliii  ialoi"s  jiid^Miiciil  ii|hiii  iIh  admit*- 
siliilily,  liiit  of  a  mistake  as  i(»  ilir  scopf  of  tin-  siil»mis.si(»n,  il  tln-ii 
hccoiiK's  such  a  misiakt'of  fact  as  will  form  a  ;:rouiid  of  iiii|n'ac|iinj; 
tlu*  award.'"''  The  mode  of  cxamiiiiii;;  wiim-sscs  is  left  to  hiH  dis- 
cretiou.  It  is  no  ground  foi-  setting,'  aside  llic  award  that  lln-  wit- 
nesses were  not  sworn;  ami  csiicciall v  wlnic  no  ohjcciioii  is  inter- 
posed bv  the  parlies  at  ihe  tinie.'"^  NeitluT  is  it  ii(M-<*Hsar.v  that 
the  arbitrators  be  sworn,  unless  this  is  demanded  by  the  parties, 
or  reijuired  by  the  terms  of  the  submission  or  by  slalute.'"  I'lilesK 
the  sulmiission  jhon  ides  otherwise,  t  he  arbii  rators  must  ad  1(»;,'ether 
at  every  step  in  the  procet'diuj.js.  Each  must  be  pres«'iit  at  every 
lueetiuj^',  aud  must  hear  all  the  evidence;**-    and  this  is  essential 

107  Fullor  V.  Wlu'clock,  lU  I'ick.  (.Mass.)  13.");  .M;iyii:ir(l  v.  rr.-ilcrick.  7 
Gush.  (Mass.)  '241. 

108  Boston  Water-t'owiT  Co.  v.  Uray,  <;  Mck.  (Mass.i  i:;i;  I'liiltr  v.  Wlicel- 
ock,  10  Pick.  (Mass.)  13o;  Hooper  v.  Taylor,  3'J  Mo.  liL'4;  Caiiipbi'll  v.  Wi-sti-rn, 
3  Paise  (N.  Y.)  124;  Pike  v.  Ga«e,  9  Fost.  (N.  II.)  4(il.  And  set'  Ilalstead  v. 
Seaman.  .".2  How.  I'rac  (N.  Y.»  41."'). 

100  Van  ("ortlandt  v.  liulerliill,  IT  .Johns.  (N.  Y.)  4(l.">.  and  casj's  hi  preced- 
ing note.  Where  parties  are  selected  as  arbitrators  Iteeause  of  tlu-ir  special 
knowledge  of  the  matter  in  controver-sy,  and  it  is  apparent  that  the  parties 
intended  to  rely  on  that  knowledge,  the  arbitrators  may  be  jnstifled  in  refus- 
ing to  hear  evidence.    Hall  v.  Norwalk  Fire  Ins.  Co..  57  Conn.  105.  17  Atl.  35(5. 

110  Hall  v.  Lawrence,  4  Term  R.  aSlt;  Maynard  v.  Frederi<'k.  7  Cusli.  (Mass.) 
247;  Fox  v.  Hazelton,  10  Pick.  (Mass.)  27.");  I'atten  v.  Iliumewell,  8  tJreenl. 
(Me.)  19;  Woodrow  v.  O'Conner,  28  Vt.  770;  Greer  v.  Cantield,  38  Neb.  1«S).  56 
N,W.  88.3;  Terry  v.  Moore  (Com.  PI.)  22  N.  Y.  Siipp.  7S.":  Cochran  v.  Bartle. 
91  Mo.  030,   3  S.  W.  8.>4. 

HI  Kankakee  &  S.  W.  R.  Co.  v.  Alfred,  :\  111.  App.  .")11;  Katt  v.  Insumucc 
Co.,  20  Hun  (N.  Y.)  429;   Payne  v.  Crawford  (Ala.)  10  Snutli.  Oil. 

112  Taylor  v.  Towing  Co.,  25  III.  App.  .'lOa;  Id..  120  111.  2ro.  is  N.  K.  tun; 
Thompson  v.  Mitcliell,  3."i  Me.  2S1;  Carpenter  v.  WoikI.  1  Mete  (.Mass.)  409; 
Smith  V.  Smith.  2S  111.  50;  Maynard  v.  Frederick,  7  Cush.  247;  Uurriii  v. 
Norton,  7  Wend.  .")34. 


20  AKHITUATlnN    AND    AUAUD. 

:illliou;:h  it  !'<•  si  iiiiil;il««i  lli;il  a  iniijorily  iii:iv  innlvc  llir  iiwiird."^ 
Hut  il  is  hrhl  Jhat  in  lUr  laMfi-  lasc.  if  oiif  nf  the  arliitiatoi-s  rc- 
fiisr  to  act.  tln'  Dtlit'i's  have  imwcr  tn  tnak<'  a  \alitl  award."*  l-lach 
arliitrator  must  ad  in  jicison.  lie  laiiimi  dilruair  liis  aiiilioiitv 
without  foiisciil  of  all  till-  parties  to  llic  suliinissioii.""  As  the 
aiutlioiity  of  the  arbilraiois  nids  with  the  iiiakiu;;  and  imliiical  ion 
of  tin-  award,  aii.v  pi-»M«cdiiius  tlinraflor  ai-c  a  tiullilv.  Tlioy  have 
tin  11  II o  |i(»wt'i'  to  hraf  flirt  licr  r\  idriHc.  fccoiisidi'f  any  drridi  d  poiiil. 
or  rvon  to  chanjn'  ilu-  award  fof  llu-  purpose  of  ((Uicetini;  a  uiati*- 
rial   eiror."* 

AWARD. 

8.  Tlie  award  is  the  expressed  decision  of  the  arbitrators 
on  the  questions  submitted.  To  be  valid,  it  must 
be— 

(a)  Co-extensive  with  the  submission. 

(bj  Certain  to  a  common  intent. 

(c)  Possible  and  reasonable. 

(d)  Final  and  conclusive. 

Tlie  teiiii  "award"  is  used  to  desi<:iiate  the  decision  of  tlu'  ai'bi- 
trators  without   regard   lo   the  foim  in   whieh  it    is  expressed;    it  is 

>>»K<'nt  V.   rrcncli.  7t;  I<>\v:i.  isT,    40  N.  W.  71.".;    Ddlu-rty  v.  DolnTty,  148 

.M.ifw.  :nn.  19  N.  K.  :i'>2. 

i««  Kile  V.  Chnpin.  0  In«l.  ino. 

JiaMcirsc.  Arlt.  1<;<;;  Unss.  Arh.  I'.is;  Wii;,'lit  v.  Miver  I'l'cx.  Civ.  Aitlt.i  -."> 
.<.   W.   H'JJ. 

>>•>  H.'iyiu'  V.  Morris.  1  Wall.  HT:  I>u<llty  v.  Tlinmas.  L*:;  Cal.  :;tr.;  'I'.ilhntI  v. 
IlarlU-y.  1  Craiich.  ('.  ('.  :U.  F.-il.  ("as.  .NO.  VA.TA-J;  l.ausdal*'  v.  K.n.lall.  4 
I 'aim  (Ky.)  *\\'\:  Hutlt-r  v.  Hoyh-s.  lo  IIuiiipli.  (Tfuii.)  l.V);  Alilricli  v.  .Icssi- 
iiuin.  M  .\.  H.  :,\i'>;  Thf'iiipsnii  v.  Mltcln-ll.  ;5.".  .Mi>.  L'SI ;  Wdodluuy  v.  Nnrlliy.  ."{ 
tJnMMil.  (.Ml'.)  ST.;  I><ik<«  v.  .Iiuih'.s,  4  .\.  Y.  r,r,s;  I'litlnn  v.  llalnl.  7  Ir.<I.  I^i.  (»:. 
«'.)  i:.V>;  Ilo;c«TH  V.  CorrotlitTH.  L'«;  W.  Va.  'J.'JS;  Ilcrltst  v.  Ha;:(iia»Ts,  1.'17  .\. 
V.  IHHi.  Xi  N.  K.  mr,;  Kljiiuifry  v.  Sahnyian.  l.'.l  N.  V.  s.'.,  .'.l  N.  K.  :nu.  Mm 
a  niiTf  ili-rh-nl  iTr«»r  of  oiiiIshIom.  not  afTi'<iliiK  tin-  iiiniis,  may  bo  cnrn'iti'd 
aftiT  «l«'llv«T>-.  (t(MM|c|l  V.  Uuyiiioiiii.  '_'7  Vt.  I'll.  An  awanl  made  .Kconlln;;  to 
thf>  trrtnM  of  tlH>  HuliiiilKKJori  Ik  not  rciulcn-d  Invalid  by  a  sn|)|iii'iii<'iii:il  .iward 
whifh  In  not  witliln  tin-  terms  of  the  Hnbinlsslon.  IJldy's  V.x'v  v.  .Ncnilmp  iKy.i 
ISJ  8.  \\.  3o3. 


A\VAIU».  21 

also  used  ill  ;i  iiKiic  spicilic  Nciisc  ;i.s  rcfcnin;,'  In  the  iiislniiiii'Mt 
cimlaiiiin^  tli:it  (icrisimi  wlnn  pui  into  wriliii;,'."  •  ( H-n<Tiill\ .  a 
parol  award  will  lie  valid  '"  even  iliounii  ||,,.  Hiilnnissiuii  In-  in  wii: 
in<;-,""  unless,  b.v  reason  of  shiliitorv  provisions,  ihf  liriiis  of  ilir 
submission,  or  llie  ii;itiire  of  liir  siiliject-mallci-.  a  wriiien  aw;iid 
is  riMpiired.'-"  Itiii  si  ipiiiai  ions  in  llie  submission  as  lo  the  form 
and  execution  of  ilie  award  should  control.'*'  'IMie  lan^ua;,'e  will 
be  lilx'iall  V  consi  rued;  '--  and  if  i(  expresses  a  posii  i\  c  dfcision  wiili 
reasonable  clearness  ;ind  (eriaiijiy,  trilling'  inaccuracies,  insensible 
expressions,  and  lack  of  teclmical  formality  will  be  disn^'arded. 
The  intention  of  the  arbitrators  is  the  essential  element,  and  ellect 
Vill  be  j^ivell  to  it    w  heiie\cr  possible. '-'' 

Essenlutl  J-hUurcs. 

As  tlu'  arbitrators  derive  all  their  authority  from  the  submission, 
and  as  the  obliyation  of  the  parties  to  abide  by  the  award  sprin;;s 

11"  Bouv.  lust.  §  240U;   Com.  Dij:.  "Arbitrament."  E;   3  Vin.  Abr.  .jli.  372. 

lis  Elmt'udorl'  v.  Harris,  23  Wend.  (i2S;  (Jiles  Litbonrapliic  A:  Lilx>rty  Trlut- 
ing  Co.  V.  Recamier  Mauuf'g  Co.,  15  N.  Y.  St.  Rep.  3r>4;  rhill)rick  v.  Preble, 
18  Me.  2'>o\  Slielton  v.  Aleox,  11  Conn.  239;  Smith  v.  Dou^'la.ss,  lU  111.  34; 
Gay  V.  Waltiuau.  8!)  Pa.  St.  453;  Joue.s  v.  Dewey,  17  N.  H.  .j'JG.  A  parol 
award  is  not  vitiated  by  a  subsequent  ineffectual  attempt  to  reduce  It  to 
writing.    Dounell  v.  Lee,  58  Mo.  App.  288. 

110  Morse,  Arb.  2."iG;  White  v.  Fox,  29  Conn.  57(1;  (Joodcil  v.  Kayuiond,  27 
Vt.  241;    Marsli  v.  Packer,  20  Vt.  198;    Crabtree  v.  Grceu,  8  Ga.  s. 

120  I'hilbrick  v.  IMclile,  18  Me.  2.55;  Evans  v.  McKinsey.  Litt.  Sel.  Cas.  (Ky.i 
2G2;  McManus  v.  McCulloch,  G  Watts  (Pa.)  357;  Darby's  Lessee  v.  Russell, 
5  Hayw.  (Touu.)  139. 

121  Morse,  Arb.  257:  Pratt  v.  Ilackott,  G  Johns.  (N.  Y.)  14;  Stanton  v. 
Henry,  11  Johns.  (N.  Y.)  133;  Kloomer  v.  Sherman,  5  Paige  (N.  Y.)  575;  Cald'^ 
well  V.  Dickinson,  13  Gray  (Mass.)  .•'.G5;  Allen  v.  Galpin,  9  Harb.  (N.  Y.)  24(!: 
Nowiiian  v.  Laboaume.  9  Mo.  30.  Rut  such  stipulations  may  bo  waived.  Tu- 
dor v.  Scovell.  20  N.  IL  174.  An  award  valid  in  other  respects  is  not  invalid 
because  not  made  under  seal,  though  recpiired  by  the  submission  to  be  so 
made.     Matlicws  v.  Miller.  25  W.  \:\.  S17. 

122  Kinford  v.  Xy(\  2(i  Vt.  132;  Coxe  v.  Lundy,  1  N.  J.  Law.  2.55;  (Jrier  v. 
Grier,  1  Dall.  171:  Innes  v.  Miller,  Id.  18S;  Gonsales  v.  Deavens,  2  Yeatcs 
(Pa.)  5;!9:   Joy  V.  Simpson,  2  X.  IL  179. 

123  Morse,  Arb.  252:  Adams  v.  Adams.  2  Mr.d.  ir.ii;  Mir)onald  v.  Anmut.  14 
111.  .58;  Lewis  y.  Rurj;oss,  5  Gill  uMd.)  129;  Kmss  v.  W.itl,  IG  111.  99;  Dibblce 
V.  Best,  11  Johns.  103. 


22  AunnuATi<»N   and  award. 

fnun  ilifir  |»rotuis«'  tn  ili;it  <lT.-(l.  cxpiM'svrd  or  iinpli<<l.  in  lliiit 
:i;;rf»uunt.''*  it  is  jii»|i;iniil  lli:it  tlu'  :iw:ii«l.  to  l»«'  Idniliii;^.  niiist, 
in  all  rssfiitial  |tar1itnl;ns,  coiifonn  to  thr  suhiiiissioii.  If  it  fails 
to  nuliracc.  »'X1Um>s.-Iv  or  liv  nrccssiirv  iniiilication.  :ili  llif  iiiattorH 
suhiiiittfd  ami  actuallv  picsoiitrd  at  tin-  lu-ariiij;.'-'  il  is  void;'-" 
and  if  it  intlu<l«'S  niattns  not  sul>initt»'d  it  will  at  It-ast  Iw  void  as  to 
tlii-ni;  and,  nnlcss  the  nnantlnM-i/rd  i>art  can  Im-  s<'|ia!ai«d  from  iId- 
rt'st.  the  wholf  ninsl  fall.'-'  r.nl  in  sniiimit  of  lii.-  award  il  will 
Itf  itrrsanu'd.  until  the  contraiy  is  shown,  that  the  terms  of  lli«' 
submission  have  Uwu  follows*!,  and  that  all  matlci-s  ariually  prt'- 
sont.-d   wiTo  dftfrniim'd.'^*      That    ihr  awaid    is  co  <v\toiisivc   with 

iJ«  (aldw.  Arlt.  ITJr,,  note  1.     See  Stouo  V.  Atwood,  li-S  111.  'M. 

>  =  iTli;it  till*  iirliltrattirs  are  IkiuikI  to  pass  upon  only  tlio  niattfrs  actually 
pn*.M'iile«I  at  the  liwirlnK.  see  Jones  v.  Wi-hvood,  71  N.  V.  Uos;  Hostou  & 
L.  U.  Con>.  V.  Nashua  &  L.  U.  Coq)..  l.Ut  Mass.  4U5,  .Il  N.  K.  7."il;  Ta^e  v. 
Foster,  7  .N.  II.  •i'S2:  liallauce  v.  Indeihill,  3  Scam.  (111.)  4.')3;  Whetstone  v. 
Thomas,  'J-'i  111.  .''.•".l ;    Ott  v.  Scliroeiipel.  .">  N.  Y.  4s_':    Warlh-ld  v.   1  l.illti'ook,  20 

rick.  .'..n. 

i2«  Hradford  v.  Hrvaii.  Willes,  •Jf.S;  Wii::lii  v.  \Vii;:lit.  .".  Cow.  (N.  Y.)  107; 
Sherfy  v.  (Jniluim.  7l'  111.  ir.s;  Hewitt  v.  I'uiinaii.  U;  Sei;:.  A:  K.  (Ta.)  i;^."); 
CanuKhan  v.  Christie.  11  Wheat.  4n;:  Marker  v.  Ihmu'li.  T  N.  .1.  Law.  428; 
Sc<itt  V.  names,  7  Pa.  St.  VM;   Jones  v.  -WelwotMl.  71  N.  Y.  Jos. 

>i'  Ilamlltou  V.  Hart,  12.-.  Pa.  St.  142.  17  -Ml.  2-Ji;.  17;;:  Waters  v.  Hrld«e, 
Cro.  Jac.  «k{«»;  Lee  v.  Klkius,  12  .Mod.  .-,s7:  Hill  v.  Tiioni,  2  M.mI.  :!0'.t;  Peters 
V.  Pelrce,  S  .Mass.  ;V.t!»;  Culver  v.  .\shley,  17  Pick.  (Mas.s.)  'JS;  Lorey  v.  I^orey, 
1  .Mo.  App.  Kep'r.  1S'.»;  Thrasher  v.  Haynes.  2  .\.  H.  4211;  Leslie  v.  Leslie,  !")2 
N.  J.  Kq.  ;i:52.  :n  Atl.  724;Sawtells  v.  Ho\var<l  i.Midi.i  t.J  .\.  \V.  ]:.•;;  Doane 
C<illej:e  V.  Ijiuham.  2t;  Neli.  421.  12  N.  W.  V>:>:  Wiiite  v.  Arthur,  .V.»  Cal.  :W; 
.Melirlde  V.  Hak'cii,  1  Wend.  (.\.  Y.i  :t2i;;  Cl«  iiieiit  v.  Dur^'iu.  1  Creenl.  (.Me.) 
:WHJ;  Cox  V.  Jak'Uer,  2  Cow.  (.\.  Y.»  t'^js;  Conner  v.  James,  2  Swan  (Tetut.)  21.3; 
Lynch  v.  Nuu-ent,  S<)  Iowa,  422,  4<;  .\.  W.  (51;  Phllbrlek  v.  Preble.  IS  Me.  2.'.1: 
Walker  V.  Merrill.  13  .Me.  17:;;    Hill  v.  Tliorn.  2  .M..d.  :io'.t. 

«J»SiM'rry  v.  Uh-ker,  4  Alien  iMass.i  17;    Call  v.  Hall;ird.  (».")  Wis.  1S7,  2i!  .\. 

W.  .VIT;   Ji.neM  V.  Welw I,  71   N.  Y.  2i>S;    Darsf  v.  Collli-r.  si;  III.  '.id:    K.-irfh- 

nuN  V.  Ferrer.  1  Pet.  222:  Harris  v.  Wilson.  1  W.iid.  (N.  Y.i  .■.11:  <»tt  v. 
SehnM'piM'l.  r>  N.  Y.  4S'J;  Tallman  v.  Tallman,  7>  Cush.  t.Ma.s.s.)  ;{:.',->:  Yo\m«  v. 
Kliiiu'V.  4.S  VI.  22;  I-'imphlre  v.  Cowan.  :tn  VI.  I2(»;  Solomons  v.  .M«Klnstry. 
1.',  .1.  liiiK.  (N.  Y.>  27;  Joy  v.  Simpson.  2  N.  H.  17'.i;  Clement  v.  Comstock.  2 
Ml'li.  .''..'>'.»;  iladawny  v.  Kelly.  7S  III.  2.S«5.  One  who  h.-is  lU-cepted  the  lnMiellts 
of  the  award  Im  putnpped  to  nlijeci  to  Us  validity  on  the  Ki-onnd  ili.it  it  did  not 
•  uihrace  nil  niatlern  nulimlttcMl.    (Jriinmett  v.  Sndtli,  42  111.  .\pii.  .■>77.     .\  party 


AW. MM).  J., 

Ilic  siilmiission  iiiny  iippcjir  \>\  iiii|ili<;itiiiii.''"''  Tlif  rule  in<-aHiir- 
in^'  llic  scope  (if  tlic  ii\v;ii(l  hy  III.-  siihiiiissiiiii  applifs  lo  Ihthoum 
as  well  as  t<i  llir  siilijcci  nial  I<t:  ami  fioin  iliis  it  follows  that  the 
award  tan  iiii|it(sr  no  olilij^alion  on  a  siian;:<r  lo  ili<-  hiiliniiHHioii.' 
I'-Ml  ii  is  nol  iiikIckmI  invalid  by  a  icfciiin  »•  l«»  a  Hiraii;:<T  mmT"  iy 
as  ilir  a^tiii  or  inslniincnt  of  one  of  tin-  parlios,'"  nor  liv  a  <lit«M-- 
tion  that  onr  of  the  parties  sliall  pay  a  sum  nt  ninncy  to  a  slian;:'! 
on  account  of  tin-  otlicr,''-  or  that  on--  party  shall  dischar;:«'  ih.- 
other  fi-om  a  l»on<l  to  a  stranger  <in  w  hii  li  oihris  are  also  hoiind.'  '' 

'I'lic  riipiircnifni  Ihai  an  awai'd  niiisi  in-  ccitain  is  complied  with 
if  it  is  so  expressed  liiai  no  reasonahh'  dmilit  can  arisi-  ii|Hin  its 
face  as  to  the  nalnre  and  extent  of  the  duties  imposed  liy  it  upon 
the  jiarties.'"'*  It  is  sullicienlly  certain  if  stated  in  such  laiij,Mia;:e 
that  an  ordinary  man  acquainied  with  the  suliject-mattef  can  un- 
derstand it,''-'  Of  if  it  can  he  remit  red  certain  hy  inspection  or  mere 
calculation  '•'"'    or   liy    other    sunicient    means   ]»ro\ided    for   in    the 

KMUiitit  juvcpt  the  iH'iiflits  iif  a  i);nt  nf  tlic  awanl  ami  oltji-ct  t<j  the  iiivaliiiity 
of  aut)thor  part;   the  award  is  an  entirety.    Thornton  v.  McCorniick,  "."(  Inwa. 

2sr(.  ;;!»  n.  w.  r.oi'. 

1-^  Kixftml  V.  Nye.  '20  Vt.  i:5l2;  Sinilli  v.  Demarcst.  ,s  N.  .1.  Law,  I'.i.".;  Stick- 
les V.  Arnold,  1  (hay  (Mass.)  418;  Biu-kland  v.  Conway.  If.  .Mass.  .'itHI;  .Micklos 
V.  Thayer.  14  Allen  (.Mass.)  114;  Laniiiiiire  v.  Cnwan.  :'.!)  Vt.  4Jn;  Dejliicr  v. 
Win?;,  :^  Greenl.  (Me.)  4l.'l. 

13"  Com.  Dl.i.'.  "Arbitrament,"  E,  1;  Caltlw.  .\rli.  liL's;  Bretton  v.  Trat.  Cro, 
Eliz.  7r>S;  Adams  v.  Stratham.  2  Lev.  li:;.'.;  Tliirsl.y  v.  Ilclliont,  .'{  .Mod.  1172; 
Martin  v.  Williams,  i;?  .loliiis.  i.\.  V.i  lir,4:  <"liapiiian  v.  Champion.  2  Day 
(Conn.)  lol;  Wyatt  v.  Heiistiu.  •_'.•>  Uarh.  t.X.  Y.i  :',-~;  Ctilliiis  v.  I-n-.-is,  77  Ta. 
St.  411:]. 

131  Caltlw.  Arl).  L'L'S:    Snonk  v.  Ilcilycr,  L'  Cliit.  41!;    Hinl  v.  Bird.  1  Salk.  74. 

132  Beckett  v.  Taylor,  1  Mod.  i»;  Bird  v.  Bird,  1  S.ilk.  74:  Boston  v.  Brazcr. 
11  Mass.  447;    Lainjihire  v.  Cowan.  .'V.t  Vt.  4liti. 

133  BiatUty  v.  Clyston,  Cro.  Car.  ."41. 

134  Buss.  Arb.  I'.sc;  Infrraliam  v.  Whit  more,  7.">  111.  I'l;  Hawkins  v.  Col- 
clouph.  1  Burrows.  27.j;  Purtly  v.  Dclavan.  1  Caines  (N.  Y.)  304;  McDonald 
V.  Baeon,  3  Seam.  (111.)  4;;l;  Waite  v.  Barry.  12  Wend.  iN.  Y.i  377;  Akfly  v. 
Akely,  K!  Vt.  4."0;  Woodward  v.  At  water.  3  Iowa.  <U;  Stron«  v.  Stron;:.  9 
Cush.  (N.  Y.I  .'.no;    PtM-kins  v.  Giles.  .".;?  Rirb.  tN.  Y'.i  :;i2. 

13.-.  Butler  V.  Mayor  of  New  York.  1   Hill  (N.  Y.)  4V.t. 

136  Henrieksou  v.  Ktiul)ath.  :'..'.  111.  290;  Cochran  v.  Banle.  91  Mo.  iVin,  3 
S.  W.  8."4;  Butler  v.  .Mayor  of  New  York.  1  Hill  (N.  Y.)  ISJI;  Bush  v.  Davis. 
34  Mich.  190;    Emery  v.  Hitchcock,  12  Wend.  (N.  Y.)  \oC>;    White  v.  Jones,  S 


■J  1  ARHITIIATION    .\M>    AWAliH. 

jiwartl  ils«'lf."'  'I'rcliniral  int'cisiuii  is  not  n'i|iiirt'il.  Tin'  f:i(l  tliiit 
llif  :i\v;ir«l  is  coiMlilioiKil.' "  «ti- in  (he  allmial  i\  r,'  '  does  iiui  ikm-cs- 
snrily  niidcr  it  v»»i»l  for  umrrtiiiniy. 

Tin-  lliiiiLT  ;i\\  ;ii  dill  to  lie  lioiii-  iiiiisl  also  In-  |M»ssili|i'.' '"  IJiil  if  it 
is  ill  its  iiatniT  ju»ssili|r.  a  suliscinu'iit  iiii|utssiliilit  v  cn-aii'd  by  ilic 
jKirly  liiuisrlf  will  not  atTrct  its  validity.'*'  Tlu'  award  slundd  hi' 
r«'as<iiial»I«'; '*-  Init.  sincr  it  is  tlir  drcision  of  judges  cliosfii  liy  iln» 
partifs.  tli«'  courts  will  noi  inii  rfnr  on  tin-  i^idimd  of  its  iinirason- 
al'li'iifss  unless  a  stion;^  case  be  made  out.'* '' 

It  is  also  ('ssciitial  to  tin-  validity  of  tlw  award  llial  it  should 
make  a  linal  disposition  of  i  In-  (lucstions  suluiiit  hd,  so  i  hat  1  liry  may 

.SiT;:.  A:  K.  (I'a.)  .Ut);  Colronl  v.  Fletcher.  ."»()  Me.  ;ms.  If  tlie  award  is  certain, 
uiit  erialiity  in  tlie  reasuniiiy  wliidi  let!  up  to  It  will  not  arte<'t  its  validity. 
Ijiiiipiiire  V.  Cowau.  :\U  Vt.   IJo. 

»s*  KletclM«r  V.  Welisler.  .">  Alien  (Mass.)  .">(;(!;  Macon  v.  Ounip.  1  Call  (Va.) 
.".7.".:  Heiison  V.  Wliite.  lol  Mass.  -IS;  Waite  v.  Barry.  V2  Weiid.  iN.  Y.t  377, 
An  award  which  is  sntlicieiilly  detinite  to  lu'  oblijratory  as  a  coiuract  is  sutfl- 
cteiitly  c«'rtaln  as  an  awanl.  Hush  v.  Davis.  :\4  Midi.  I'.Mi;  Punly  v.  Delavan, 
1  t'alnes  (X.  Y.)  .'i(>4:  ("lenient  v.  ("onisiock.  '2  .Mi<li.  .•;.V.i;  Akely  v.  Akely.  Hi 
Vt.  4.VI.  An  award  tliat  the  defendant  pay  a  certain  sum  to  "the  executors  of 
A."  is  siiltleiently  certain.  It  may  be  shown  tliat  tlie  plaint  ills  are  the  executurs. 
<;rier  V.  (;rier.  1  IhiU.  17:5.  An  award  that  one  of  the  parties  shall  have  in  his 
own  rijrlit  all  the  Interest  which  the  jjarties  jointly  had  in  a  certain  hrewery 
is  not  l»ad  for  uncertainty.  Hyers  v.  Van  Densen,  .'.  Wend.  (N.  V.i  2t;s.  An 
award  of  a  speiifle  sum  of  nmney.  dirertin;;  tliat  the  party  ajzainst  whom  tlie 
award  was  rendered  should  kIvc  "j;ood  and  sutlicient  security"  tlien>fiir.  is 
void  for  uncertainty  as  to  the  kind  of  security  reipiired.  .Tackson  v.  De  Lon«, 
fi  .loluiH.  (\.  Y.)  4.'{.  An  award  that  a  ci'rtain  sum  "was  due  on  the  ."id  of 
-M.irch  IjiKt.  with  Interest  on  the  same."  the  date  nanu'd  l)ein>r  several  months 
In-fore  the  nieetiti;;  of  the  refi-rees.  is  l>;id  fur  unecrta inty.  Youii;,'  v.  Kciihen, 
1    I  •.ill.    ll'.l. 

'    Steph.  .\.  1".  IIS;    I'ursi-r  v.   I'n.wd,  (  ro.  .I:ic.    VS.',;    Linlirl.l  v.   I'eriic.  .'] 
L.  V.    l**. 

n»  I^-e  v.  Klkins.  Il'  .Mi«l.  .'s.-,;  Wiiarli.n  v.  Kiim.  L'  Mani.  A:  .\d.il.  .M.'S;  Thorn- 
ton V.  CiirMuii,  7  CniiK-h.  .'iIh;;    .Mcl)i>nald  v.  Arnoiii.  11  111.  ."iS. 

••  •  ?  I'nn«.  r'ont.  <2M:    Lee  v.  KIklns,  12  Mod.  r.s.".. 

'     Ml.  DIu,  "Arltltranieiit."  i;.  pj;    2  Pars.  ('out.  d'.tl. 
"  Holle.  Aril.  F.  1;   Caldw    Arb.  •_'."«;    1  .^tei>li.  N.  I*.  IJ.".;    'J  P.irs.  font.  •',;>.". 
•>  WiMid  V.  (Jrlltllh.  1  .SwniiHt.  A'A;    Ilrown  v.  Hn.wii.  1   \"«rn.  I.'i7:    Walli-r  v. 
Klnjf.  II  Moil.  rtl:    IVrkluij  v.  Glle8,  n.'l  llarb.  (.\.  Y.j  ;UJ;    .'ind  authorities  cited 
In  pnvfHilni;  uolc. 


AWAItli. 

iKil  liccoiiic  the  sill)j('c|  (if  l'iiMi|-i-  lit  i;,';il  iuii.' **  All  ;i\v;ir(|  is  tili:il 
when  iiotliiii;,^  more  Iliaii  iinTc  iiiiiiisiciiul  ;i('ls  icnijiiii  tn  !»<•  done 
to  lix  llir  fi^lits  and  (ihli;,r;,ii,j„H  ,,f  i),,.  j,;ii'li»'s  as  to  tin-  inallciH  in 
<-lii<l('(l  in  il.'''  It  is  also  sai<l  that  ail  auaiil  must  !..•  imii nal ;  Iml 
lliis  scciiis  to  im-aii  Iml  little  iiioce  than  that  it  shall  he  a  Una!  h*-\ 
(lenient  of  the  ease.'"'  An  awaid  which  ]miIs  an  <iiil  t<i  (lie  ciin 
tr<»\cis_v,  and  dii'ecls  nmlnal  i-eleases,  is  sulliciently  mutual. '*'  'I'le 
fael  (hat  not  all  of  the  pai-lies  on  one  side  are  hound  do<-s  n<it  ten 
del'  it  \(»id  for  want  of  mutuality.''"* 

Eliiirc  and  JUiinlhlc  Aicanls. 

The  fact  that  a  part  of  the  award  is  not  within  the  siihiiiission. 
or  is  otherwise  invalid,  will  render  the  whole  void  only  when  ih' 
award  is  indi\  isihie.  The  general  ten(h'ncy  of  i-ourls  to  u|iliold 
the  award  has  led  to  the  establislmient  of  the  rule  that  where  the 
nuanthorized  or  in\alid  part  is  independent  of  the  rest,  and  can 
be  severed  without  jtrejndiee  to  the  rights  of  tiic  patties,  it  may  he 
rejected,  and  the  remaining  valid  portion  enforced.  I'.ut  if.  umhr 
the  submission,  the  reward  is  required  to  be  an  entirety,  it  niiisi 
stand  or  fall  as  an  entirety;  and,  if  bad  in  part,  it  will  be  bad 
iiltogether.^*" 

m  Waite  V.  P>any.  I'J  Wend.  (X.  Y.i  .'377;  Inj:r.iliain  v.  Whitmoro.  7.')  111. 
tlA;  ruiily  V.  Dclavau.  1  Caiiu's  (X.  Y.)  304;  Carnndiaii  v.  Christie,  11  Wheat. 
44G. 

KsColcord  V.  Fletcher,  aO  Me.  398;  Liiicdlii  v.  Whitteiunn  Mills.  IJ  Mete. 
<Mass.)  31;  Owens  v.  Boeium,  23  Barb.  (X.  Y.)  1S7.  An  awanl  that  a  .suit 
.«;hall  cease  is  fmal.    Simon  v.  Gavil,  1  Salk.  74;   Kniv^ht  v.  Burton,  Id.  7."i. 

140  "This  mutuality  is  nothinj;  more  than  that  the  thin;;  awarded  to  be 
done  should  be  a  liual  discharge  of  all  future  claims  by  the  party  in  whose 
favor  the  award  is  made  apainst  the  others  for  the  causes  submitted;  In  oth- 
■er  words,  that  it  shall  be  final."  Kent,  .T..  in  Punly  v.  Dflavaii.  1  Cainos  (X. 
Y.)  .".03.     See.  also,  2  Pars.  Cout.  <>".•.">. 

H'  Munro  v.  Alaire,  2  Caines  (X.  Y.)  320;  Kuiitkle  v.  Kunckle,  1  Dall.  304. 
And  au  award  that  oue  party  shall  pay  to  the  other  a  spec-ilh-  sum  is  final 
without  a  release.     Byers  v.  Van  Deusen,  .">  ^Vend.  (N.  Y.)  2<IS. 

i-**^  Harrington  v.  Iliirliam.  1."  liarb.  (X.  Y.)  ."»24;  Smith  v.  Van  Xnstrand.  ."» 
Hill  (X.  Y.)  41!»:  Stroni:  v.  Beroujon,  18  Ala.  Iil8.  The  objecti(Ui  that  a  sub- 
mission was  not  binding  because  some  of  the  parties  were  married  won)en 
and  minors  cannot  prevail  as  to  parties  liavin?  rapacity.  Fortune  v.  Klllc- 
brew  (Tex.  Civ.  App.^  21  S.  W.  ftSC,. 

!<!•  Lee  v.  Flkiiis.  12  Mod.  r.,S">;    Eokersley  v.  B<iard.  r>  Reports.  827.  [ISIM]  2 


2G  AKniTUATIii.N    ANI>    AWAItP. 


SAME     IMPEACHMENT. 

9.  Tlie  award  may  be  impeached  for — 
[jBL)  Insufficiency. 

(b)  IrroR-alarity  in  the  proceedings. 
(C)  Mistake  of  law  or  fact  apparent  on  its  face. 

(d)  Misconduct  of  the  arbitrators. 

(e)  Fraud  of  the  parties  in  procuring  it. 

ll  lias  Imtii  st><'ii  ill  tlif  pircriliii^^  scclidii  ilial  if  the  a\v:ir»l  is 
insutllcifnt — thai  is.  larlxinu  in  any  of  the  i  (•(•«. uiii/rd  cssmiials  <tf 
a  valicl  award  tlicir  iiaim-d — it  cannot  l»f  enforced.  It  may  also  be 
impeached  h\  proof  of  any  substantial  irre^Mdarily  in  the  proceed- 
in;;s;  such  as  failure  to  ^Mve  notice  of  tlie  luarinj,',  examining  wit- 
n<ss«s  in  the  absence  of  one  of  the  parlies,  refusing  to  receive  com- 
petent evidence.  et«-.  TlieK--  jioints  also  have  been  suHiciently 
noticed  under  the  head  of  "I'roieedin-is."'-"  rromineiit  anion;:;  the 
other  gnuinds  on  \vlii«h  an  award  may  In-  iiiiiMMched  is  a  mistake 
of  fact  aiqiarent  on  ils  fare.  To  in\alidate  \\\r  awaid.  liowevei-. 
the  mistake  must  be  of  such  a  maleiial  chaiactei'.  ami  so  alVectin;; 
the  princijiles  on  which  the  award  is  based,  that,  if  il  had  been 
s»-asonably  known  or  disclosed  to  the  arbit lators,  they  would  proli- 
ably  have  come  t<»  a  diHereul  decisi(»n.' ■•'       In  sn(  ii  a  case  the  award 

g.  H.  e,<;7;  i\,x  v.  ,I;m^(T.  li  Cnw.  (.N.  Y.t  *VAs;  Mnrliii  v.  Williams,  V\  .toluis. 
(N.  V.)  'J<r4;  Hiirrlimti.il  v.  Hlvliiim.  1."  Hiuh  (N.  Y.)  .VJ4:  Steams  v.  Cope. 
KKi  III.  .•{»0;  .\<ljiins'  Adin'r  v.  lUiuio.  7U  Iv.v  I'll;  I.ittlelicltl  v.  Wjitcrliouse. 
s:i  Me.  :M»7.  -J'J  Atl.  ITf.;  L«-sllr  V.  Leslie,  .".o  .\.  .1.  Cm.  l".'..  -4  Atl.  liXW,  McCnll 
V.  .McCjill.  .'{<■,  S.  <:.  SO.  ir»  S.  K.  'Ms;  Uouck  V.  Uniirk.  .".7  .Minn.  t'.M).  r,U  S.  W. 
•V47:  nn«l.  p'lH-nill.v,  ciiKes  «-lte(l  in  note  lli7. 

160  StM^  "rnHTe«llnK8,'*  ante,  p.  17. 

m  ItoKlon  Water-Power  Co.  v.  <;ijiy.  U  .M«tc.  (.Mjms.)  I.'.l;  Hell  v.  rrice,  "J'J 
.\.  J.  IJiw.  .'7s;  .MorrlH  v.  IIohh,  'J  IIiii.  \-  .M.  (Vn.)  40S;  .Melviniiey  v.  New- 
...inb.  .'  Cow.  (N.  Y.»  VS>;  iniil;:iii!iii  v.  Hriiluiiuin,  L'.l  .Mo.  '_'7_':  Henick  v. 
lUnlr.  1  JoluiH.  Ch.  iS.  Y.)  lol;  PeikliiH  v.  Clh's,  :..'{  Harh.  (N.  Y.)  MJ;  Peiidiy 
V.  IlUchlo,  4  Col.  2(*5;  McCnlmont  v.  WJiltaker,  :{  Uawle  d'a.)  St.  One  Hcek- 
Ujk  to  wt  nni«!e  un  awnni  on  the  uround  of  nil.stake  must  show  that  if  the 
iiii«tak«'  lin«l  not  (uenrred  ihi-  award  would  have  been  dllTereiil.  tjnrliion  v. 
.Millard.  .V»  Iowa.  .'..'.»;   Tank  v.  Itidiwcdt-r  (lowai  f,7  N    W.  Km;. 


AW  AIM) IMl'KArllMKNT.  'J7 

(loos  nol  ('.\i»rcss  tlir  Inn'  Jiid-mriit  (,f  the  ;iiliii  riilctrw.  TIiim  K;iiiHf 
l)rincij>lc  ;i|)|iliis  to  iiiislakcs  nl  l.iw  in  cikck  wlinc  the  whole  mat- 
lor  ol"  law  and  I'acl  is  siiliinii  hd.  An  f-r-i-oncuns  asNiiinpiiiin  <»f 
what  tho  law  is,  if  ajipaii  ni  nn  I  \\r  I'arr  d  iIm-  awaid.  may  !».•  j,'iMiin-l 
foi-  sfllin;;-  il  aside;  l.nl.  il  tiic  aihii  i  alur  lias  cxiM-cisiMJ  iiis  jn  i 
nicnl  as  to  tin-  law,  it  is  concinsiN  «•,  ilion;^li  it  he  cnoncoiis.'  ■  'j'lic 
award  may  also  lie  im|H'a(licd  fm-  miscondint  on  the  |»arl  of  ilw 
arbili-aloi-s  wliicii  is  ]»i<'sninalily  prcjudiiial  t<i  om-  of  the  part'n-H.' 
'rims  the  fact  that  uuo  of  the  aihitiators  was  inloxicatcd  at  tin- 
tinu'  of  tho  hoarinjjj,'^*  or  that  prior  to  his  apiiointincnt  he  had 
foniK'd  and  oxprossod  an  opinion  on  tho  case,  and  accepted  the  ollire 
of  ai-liilralor  witiioui  disclosin;::  this  fad.'''''  or  that  after  his  aji 
pointment  he  conversed  fre<-ly  aiiont  the  controversy  with  one  who 
had  acted  as  arhitrator  ui>on  a  prior  submission  «if  the  same  mat- 
ter,'"'  is  «,M-oiind  for  sottin*,'  asido  hin  award.  I-^aiid  l.y  the  par 
ties  in  obtainin«jf  tho  award  may  also  romh-r  it  invalid.'  "  I'.iii 
in  all  thoso  casos  tho  ground  of  impoachmont  must  he  sultstantial. 
prejudicial  to  tho  pjirty  urging  it,  and  not  tho  rosult  of  his  own  mis 

152  Smith  V.  Thoriulilvf,  8  Grconl.  (Mc.)  119;  Boston  Watcr-rowi-r  Co.  v. 
(Jray.  G  Mote.  (Mass.)  131;  Ilalstead  v.  Seaman.  51'  How.  I'rac.  (N.  Y.)  41.".; 
Ilall  V.  Insiirauce  Co.,  57  Coun.  K).").  17  Atl.  S.KJ;  Goddard  v.  Kin;;.  40  .Minn. 
KM,  41  \.  W.  (mO;  Swasej-  v.  Laycock,  1  Handy  (Oliio)  :{;{4;  .Toix's  v.  U«»ston 
Mill  Coip..  (1  ri(  k.  (Mass.)  14S;  Bell  v.  Price.  L'2  N.  .J.  I^w,  r.7s;  May  v.  Miller. 
59  Vt.  577,  7  Atl.  SIS. 

163  stion;;  v.  Strong'.  1>  Cusli.  (.Mass.i  .".(11;  Hand  v.  HediiiKtou,  i:5  N.  H.  72; 
Bash  V.  Christian,  77  Ind.  L".k).  The  fact  that  one  of  the  arbitrators,  dnrinj; 
the  lieariii};.  remained  at  the  liouse  of  the  successful  parly  sevonil  nights, 
partakiiis  of  his  hospitality,  and  that  auother  of  them  dined  at  an  hotel  at  his 
expense,  is  suttieieut  evidence  of  misconduct  to  warraut  settiug  aside  the 
award.    Robinson  v.  Siianks,  118  Ind.  125,  20  N.  E.  713. 

1S4  Smith  V.  Smith.  2s  ill.  r,G.    See.  also.  White  v.  Uobinson.  r^)  m.  4'.>'.i. 

iBoBoattie  v.  Hilliard,  .").".  \.  H.  42s.  iSnt  see  Murville  v.  American  Tra<'t 
Soc,  12.S  Mass.  129. 

150  Moshier  v.  Shear,  lo2  III.  1G9.  But  the  fact  that  one  selected  as  an 
arbitrator  had.  five  years  iK'fure.  expressed  an  opinion  on  the  subject  of  dis- 
pute unfavorable  to  one  of  the  parties,  did  not  render  him  ineompetent.  Brush 
V.  Fisher,  70  Mich.  409.  38  N.  W.  44(1. 

167  2  Pars.  Cont.  707;  Morse.  Art).  54(t;  Stockinn  C.imtdned  Harv.  >:cr  j^ 
A;,M  icultural  Wurks  v.  Insurance  Co.,  9S  Cal.  557,  l\^\  Pae.  G33. 


2*^  AUIUTKATION    AM)    AWAUH. 

I'oiulurt."^"     Tho  |trtsiiiiii»ii<ins  an-  all   in   favor  of  its  validity  and 
ciincliisivciicss.''^" 

SAME— EFFECT. 

10.  As  to  all  matters  submitted  and  decided,  a  valid  a-ward 
has,  in  general,  the  force  and  effect  of  a  final  judg- 
ment in  an  action  bet"ween  the  parties. 

As  soon  as  the  award  is  made  and  ])iililisli»'d,  the  controverted 
niait«-i-s  become  merged,^""  and  no  lontici-  fnrnisli  ground  for  liti- 
;:ation.  So  long  as  the  award  remains  nnim{>eaclied,  suit  can  be 
niainiained  only  for  its  enforcement,  and  not  on  the  original  cause 
t»f  action.  Unless  the  award  expressly  i-rovidcs  that  it  shall  have 
a  temiK)rary  elTect  only,""  it  binds  the  rights  of  the  jiarties  for 
all  time,  without  the  right  of  appeal.'"-  It  may  be  used  iu  evi- 
dtnce,*®'  or  as  a  defense  or  bar  to  a  subsequent  suit,"^*  or  it  may  be 

»-sHoKt*i-s  V.  ConotluMs.  L'C  W.  Va.  L'.'is;  Tlujiiiiisou  v.  IJluDchard,  2  Iowa. 
44;  Davy  v.  Faw.  7  Craiuli,  171;  roinroy  v.  Kibbee.  2  Root  (Conn.)  92;  Tmii- 
linsou  V.  Hauunoud,  8  Iowa,  40;  Daniels  v.  Willis,  7  Minn.  374  (Gil.  205);  Mc- 
Kiiniey  v.  Newcdiiib,  5  Cow.  (N.  Y.)  42.j;  Kimball  v.  Walker,  30  111.  4S2; 
riuminer  v.  Sanders.  ."..-  X.  II.  23;  Steams  v.  Cope,  109  111.  340;  Steere  v. 
BrowucU,  113  111.  415;  Kartliaus  v.  Ferrer,  1  Pet.  222;  Beam  v,  Macomber, 
33  MIeh.  127.  .Mere  irre;;ularity  without  fraud  will  nut  invalidate  the  award. 
Golder  v.  .Mueller.  22  111.  Ajip.  .".27. 

150  Kartliaus  v.  Ferrer.  1  Tet.  222;  Ott  v.  Sclinieppel.  5  N.  Y.  482;  Merritt  v. 
Merritt.  11  111.  ."»(>5;  Strong;  v.  Strouj:,  9  Gush.  (Mass.)  500;  Y'oun:;  v.  Kinney, 
48  Vt.  22:  Hush  v.  Davis,  .U  Mich.  190;  Clement  v.  Comstoclc,  2  Mich.  359; 
McDonald  v.  Arnout,  14  111.  .58;  Liverpool  &  Loudon  &  Globe  lus.  Co.  v. 
Goehrlujr.  !«>  Va.  St.  1.3. 

10"  Varney  v.  Brewster,  1  J  N.  11.  I'.i;  Tevis'  Ex'r  v.  Tevis'  Ex'r,  4  T.  B.  Mou. 
<Ky.)  4<J;  AriustrouK  v.  Masten,  11  .T(.luis.  (\.  Y.)  189;  Evans  v.  McKiusey, 
Lltt.  Sel.  Cas.  (Ky.i  2<;2;    Cerrish  v.  Avers.  :!  Scam.  (111.)  215. 

>«i  See   Kuss.   Aril.   51  1. 

>«2  Whltelie.-id  V.  'I'attei-sall.  1  Ado!.  A:  K.  I'.H  :  .Mcni|iliis  &  C.  K.  Co.  v. 
Senm«H.  50  .Miss.  2.S1;  Ulcliard.sou  v.  Lauiiiiif,'.  2i;  X.  .1.  Law.  i:50;  Ko-ers  v. 
Ilolden,  13  III.  29.3;  Stevenson  v.  Beeeher.  1  .lolnis.  (X.  Y.)  4'.t2;  .\l»lu)tt  v. 
KeJtIi,  11   Vt.  .525;    .Miller  v.  \'au«lian,  1  .lolms.  (X.   V.i  .■;15;    Morse  v.   I'.islinp, 

.55  Vt.  irn. 

>•■•»  UusH.  Arb.  .5.55;    Sylway  v.  Wliitc,  1  Meos.  iK:  W.  4;'.5;    Wliileliead  v.  Tat- 
lerwill,  1  Adol.  &  K.  491;    Moore  v.  Helms,  74  Ala.  ."{(IS. 
»«♦  Bnizill  V.  iHlinni,  12  N.  Y.  9:    Jessimau  v.  Iron  Co.,  1  X.  H.  r.s;    (.)wcu3 


A  \v.\  lU) — knk()I{(;i:mknt.  20 

enforced  by  an  action  at  law  or  in  (•(piji  \  ; '"■•  Imt  in  •iili.-r  ciisc 
it  operates  onl}'  between  llic  iiaitics,  and,  as  a  general  iiilc.  it 
can  neither  be  used  by  nor  aj^ainst  a  slrant^cr.""'  As  to  (pn's 
tions  alTectinjj^  real  estate,  it  o[)('rates  by  way  of  csIoiiimI  only;  ii 
cannot  pass  title/"''  11'  olTci-cd  in  cn  idein'c,  or  on  mot  ion  for  jud;^- 
nient  upon  it,  the  adverse  paity  may  usually  present  evidenee  to 
impeach  its  validity;^"*  but  until  this  has  been  successfully  done 
it  remains  in  all  respects  conclusive  as  between  the  parties. 


SAME— ENFORCEMENT. 

11.  The  award  may  be  enforced  by — 

(a)  Suit  for  specific  performance. 

(b)  Suit  at  law  on  the  award. 

(c)  Suit  on  the  arbitration  bond;  or,  where  provided  by 

statute,  by 

(d)  Entry    of  judgment   on   the    award,  enforceable    as 

other  judgments,  by  execution  or  attachment. 

The  award,  itself,  and  not  the  submission,  is  the  proper  founda- 
tion of  an  action  for  the  enforcement  of  its  provisions.^ "^^  If  the 
terms  of  the  submission  require  that  the  award  shall  be  published,  the 
action  Avill  not  lie  until  after  publication.^^"  Generally,  e(]uity  will 
enforce  specific  performance  of  the  award  where  the  thing  it  ordei-s 

V.  Boerum,  23  Barb.  (N.  Y.)  187;  Preston  v.  Whitcoinl),  11  Vt.  47;  Halt.-s  v. 
Machine  Works,  120  lud.  185,  28  N.  E.  31'J;  Kiloy  v.  Hicks,  81  Ga.  2t;."..  7  S. 
E.  173. 

lee  See  "Enforcement,"  p.  29. 

1G6  Morse,  Arb.  519;    Russ.  Arb.  521;    Thompson  v.  Noel.  1  Atk.  (V). 

1C7  Henry  v.  Kirwan,  9  Ir.  C.  L.  459;  Smalley  v.  Ilaih-oad  Co..  2  Hurl.  A:  N. 
158;  Slu'lton  v.  Alcox,  11  Conn.  240;  Cox  v.  Ja^'ger,  2  Cow.  (N.  Y.)  (W8;  Whit- 
ney V.  Holmes,  15  Mass.  152;    Shepard  v.  Kyers,  15  .Johns.  (N.  Y.)  497. 

168  Ingram  v.  Milnes,  8  East,  445;  Robertson  v.  Wells,  28  Miss.  9it;  R.lyca 
v.  Ramsay,  2  Wend.  (X.  Y.)  G02;  Hinklo  v.  Hanis.  ;'.4  Mo.  App.  22:;;  'IVnnant 
V.  Devine,  24  W.  Ya.  387. 

iGoRank  V.  Hill.  2  Watts  cV:  S.  (Pa.)  5(>:  West  v.  Stanley.  1  Hill  (N.  Y.i  ••.'... 
See,  also,  Hodsden  v.  Harridge,  2  Sanud.  (Ub. 

i"o  Varney  v.  Brewster,  14  N.  H.  49;  Kingsley  v.  Bill,  9  Mass.  198;  Parsons 
V.  Aldrich,  G  N.  H.  204 


•30  AKIIIIK  \TI(»N     AM)    AWAIiH. 

lo  In-  »l<iiir  is  siuli  ;is  :i  ((Mill  of  (•(|iii(v  would  li;i\c  siiciilic.iUy  cu- 
foiciMl  liihl  il  \n-fu  iiwhIc  tin-  siiltjcci  of  a  com  r;i(l  liiiwccii  llic  par- 
tics.''*  F«>Ilowin^  tlu'  ;;«'iu'ral  luinciiiics  (»f  ((iiiilv.  tlMMcforc,  an 
action  for  sjK'ciflc  iMTfimnancc  will  not  lie  ulicic  (luic  is  an  adc- 
(|iiatt'  rmictlv  at  law,'"-  or  wIkic  the  paiMv  scckiii;^  llio  aid  of  tin? 
court  has  not  |icrforin»'d  on  liis  part,  oi'  Ity  his  laches  or  othciwisc 
has  pfcjudicid  the  li^dits  of  the  olhei-  parly.'"'  The  award  may 
also  he  enforretl  hy  a  suit  at  law  appropriate  to  the  iialiii'e  of  the 
snlmiission  or  the  thin;;  awarded;  as  by  an  ad  ion  of  ( mciiaiit  where 
the  snlttnissiitn  is  hy  deed,'"*  or  an  action  of  the  ddii  where  the 
award  directs  the  payment  of  a  snm  of  money/"''  or  an  action  on  llie 
ca.«<<-  where  the  default  in  perf(Uiuance  has  resulted  in  an  injury 
to  the  propj-rty  of  tin.-  other  parly,'""  or  an  action  of  assumpsit  };en- 
erally,  where  the  siihmissi(ui  is  not  under  seal.'"  l>efanlt  in  i>er- 
fornianee   also   j;ives   a    ri^ht    of   aciiiui    on    the   arhitratiou    bond, 

>•>  Kuss.  Aril.  i\i'>:\;  Wiihcrs  v.  Morgan.  L'  (<>x.  ("Ii.  .'jr.'.t;  Jouos  v.  Mill 
€on»..  4  IMik.  (Mass.)  r^i7:  Wddd  v.  SlM'phcnl.  li  Tut.  \  II.  (Va.)  442;  liurke 
V.  rjirkc.  .-.  W.  Vn.  ll-'J;  McNear  v.  Bailey,  is  Me.  li.'il:  Halhuue  v.  Inder- 
liill.  .{  .Scaiu.  (111.)  4:):i:  McNeil  v.  Matreo.  .".  .Mason.  1^4 1.  Fed.  Cas.  No.  S,'J15; 
i'erkins  V.  (Jlles,  Ki  Barb.  (N.  Y.)  .'U:.';  Caldwell  v.  Dickiiismi,  13  (Jray,  305; 
Smith  V.  .'"Jinitli,  4  Iljiud.  (Va.)  U.'.. 

i"2  Huss.  Arl).  r»(h5;  Wallers  v.  .Mi»r;.';iii,  •_'  Cox.  Cli.  .■•.•;;•;  Smith  v.  Smith, 
4  Itaiid.  (Va.)  'Xi;  Caniiady  v.  Roberts,  f.  Ind.  Ij).  iN.  C.i  IJJ;  .Memi)his  & 
<".  IC.  Cn.  V.  SeruKHS,  .")()  Miss.  'JM;  .Tones  v.  .Mill  C..ri).,  4  \'Uk.  (M:iss.)  r>(>7; 
.McN.ar  v.  Bailey,  IS  Mo.  2."il;  .McNeil  v.  .Mm;.-.-.-,  .".  .Mason,  :i44.  Fed.  Cas.  No. 
8.l>lo. 

>•»  Morse,  Arb.  ('i04:  .McNeil  v.  .Ma-ee.  .'i  .Mason.  Jtl,  Vv^.  Cas.  .No.  S.<tl.">; 
Blackett  V.  Bates,  3.".  Ijiw  J.  Cli.  3J4;    lOads  v.  Williams,  21  Law   .1.  Cli.  'uU. 

>7«ciiarnley  v.  Wlnstanley,  .".  i;ast,  •_'»»(•,;    M.iisli  v.  Hultts-l,  .".   I'.arn.  A:   .\ld. 

'•••WliiliT  V.  White,  ;i  Moore.  «;71;  Feirer  v.  Oven.  7  Barn.  &  C.  4L>7; 
itainiiloii  V.  Boyer.  Cro.  ICliz.  .".'i7;  .McKinstry  v.  Solomons.  'J  .lolins.  (.\.  Y.) 
r.7;  Uiddell  V.  Sutton.  .".  Biritf.  1!00;  .MrNear  v.  Balhy.  is  Me.  j.M  ;  Willi.ims 
V.  raHchnll.  4  Dnll.  2X1;  B««aii  v.  Farnam.  (i  Tick.  L't;s;  Webl.  v.  /ijiei-,  70 
Ind.   lOS;    «:rim.'H  v.  Seeley,  S  Ind.  L'tU. 

>'«HluiriK'  V.  II.'UK'ock.  7  .Man.  A:  <;.  ;!.">l. 

«Ti  KiiHH.  Arb.  .Vll;  Ilodsden  v.  Ilarridue,  '2  Sanml.  r,2:  IHedri.U  v.  Ulili- 
ley,  L'  Hill  (N.  y.)  1'71;  I>oww»  V.  Co.\e.  ;:  Bin;;.  L'o;  Swicjird  v.  Wilson.  2 
.Mill.  CoiiMt.  (S.  C.)  21N;  Taylor  v,  Ballmad  Co..  .'.7  Vt.  Kh;;  B.ites  v.  Curtis. 
•-'1   IMck.  1'47;    Taylor  v.  Coryell.  12  .S(i«.  iVc  U.  (I'a.)  213;    Bierly  v.  Willianus, 

\a-\kU  (Vn.)  7W. 


AWAIMi KNKdIUI.NrKNT.  .';  I 

where   one   has  l»f.'ii    cxcciii.d.'  AimI    -.•ii.r;ill\ .    in    ih.-    Initi-il 

StateH,  in  case  of  Ntaliiloiy  siil)iiiissioii.  ih.-  awani  is  niadi-  iitiniia 
blc  into  conrl,  wlinc  jikI^^iik-ih  is  ciiicr-cd  ii|inii  it,  wliirli  in  «mi 
f<)iT(al)lr  ill  llic  same  maimer  as  aiiv  olhci-  jikI^^iih-iiI.' '"  ISiit  lli<- 
fad  liial  Ilic  slatiilf  has  1m-cii  imisiicd  in  irs|»(Ti  lu  iht-  fuirii  of  iIh- 
submission  docs  not  malcc  (liis  step  imperat  i\  e.  (  mhi-i  ;ill\  i  he  pari  v 
in  whose  fa\()r  the  awai-d  is  ma<h'  iiiav  still  ehi  i  Im  enforf  .•  it  lUMh-r 
the  statute,  or  treat  it  as  a  cnniinoii  law  award,  and  enfDne  it  hv 
action. ^***' 

178  Ferrer  v.  Oven,  7  Uniii.  A.-  (".  1_'7:  NDlle  v.  I.owc.  IS  111.  4;!7;  r.ayni'  v. 
Mdrris,  1  Wall.  1)7;  Tliuiiii)si)ii  v.  Minlii-ll.  ::.".  Mc.  2S1 ;  'riiKiiipson  v.  Cliilds. 
7  Irod.  I>a\v  (N.  C.)  4:5.");  rhuimicr  v.  .Moniil.  IS  Me.  l.vt;  (;f>()r;,'('  v.  Farr.  4<i 
N.  H.  171;  Nichols  v.  Iiisiiiniici'  Co.,  I'J  Wtiiij.  i.\.  V.(  IJ.';  I'ranolH  v.  Ames. 
14  Ind.  2~il;  Tompkins  v.  ('(.rwiii.  "a  (Ow.  iN.  V.)  i:.'.ri;  ."Nlm.yi'r  v.  Hash.  r*7 
Ind.  ^41). 

i'»  Morse,  Arb.  574;  Yates  v.  Russell.  17  .Fnlnis.  (.\.  V.i  4(;i;  Davis  v.  For 
shee,  34  Ala.  107;  Wilkes  v.  f'cttter.  IJS  Ark.  .'l'.»:  'I'lHirp.-  v.  .^t:irr.  17  III.  rci; 
Low  V.  Nolte,  l.j  111.  oflS;  Dickerson  v.  Hays,  4  I'.l.ickr.  (Iml.i  44;  Ciuii.  v. 
Pe.iepseut  Proprietors.  7  Mass.  .■:'.)!l;  Hopkins  v.  Flynn.  7  Cdw.  (.N.  Y.)  .'»:.•(;; 
Uollenback  v.  Fleminji.  (;  Hill  i.N".  Y.)  .•{o;',;    Kl)ei-soll  v.  Kru^'.  :{  liin.  (Pa.i  .".J-s. 

i"*"  Dickerson  v.  Tyuer,  4  Hlackf.  dnd.t  "J-'i-'i;  Burnside  v.  Wliitney,  1*4  Harli. 
(N.  Y.)  G32;  Titus  v.  Scantling,  4  Blaekf.  (Ind.)  SI);  Coats  v.  Ki;rer.  14  Ind.  17!»; 
Diedrick  v.  Kichley,  2  Hill,  271;  Collins  v.  Karatop.sky,  I'.r,  Ark.  :;ii;;  Wilkes 
V.  Cotter,  28  Ark.  .519;  Swasey  v.  Laycix-k,  1  Handy  (Oliim  .",;{4;  (Jri^^rs  v. 
Seeley.  8  Ind.  204;  Mitchell  v.  Bush,  7  Cow.  (N.  Y.)  IS'.;  Bi;,'elow  v.  Newell.  10 
Pick.  :U8. 


WEHT    rUBLISUI.NU   CO.,  PBIMTIlRS  A.NU  STkBKOTVPKBi),  DT.  PAUL,  MI.NN. 


Till': 


STATUTE    OF    LIMITAlIOiNS 


A  MONOGRAPH 


St.  Pali,  Minn. 

WEST   rin51,I>HlNC.   (  O. 

1899 


CorvnionT.  1899, 

BY 

WEST  PUBLISHING  COMPANY. 


THE  STATUTE  OF  LIMITATIONS. 


HISTORICAL. 


laches  may  bar  llio  rijiht  to  relief  in  ('<|iiity.'  aiul  n<  law  n  nro<litor'« 
delay  in  asserting  his  claim  may  raise  a  i-elniiialil"-  |ii('siiiii|iii(iii  that 
he  lias  been  paid;  ^  but,  aside  from  this.  la|»se  of  time,  in  the  absence 
of  express  statutory  provision,  does  not  alfect  the  rights  .of  i>ariies 
to  a  contract.  The  rights  arising  from  a  contract  are  of  a  y>ermanent 
and  indestructible  character,  unless  either  from  the  nature  of  the  c(m- 
tract  or  from  ils  terms  it  is  limited  in  point  of  duration.' 

But,  though  the  rights  arising  from  contract  are  of  this  yx-rmaneni 
character,  yet  as  long  ago  as  the  time  of  James  I.*  a  limitation  of  the 
right  to  sue  thereon  in  certain  cases  was  effected  by  a  provision  that  all 
actions  of  account  and  on  the  case,  other  than  accounts  concerning  the 
trade  of  merchandise  between  merchant  and  merchant,  their  factoi-s 
or  servants,  all  actions  of  debt  grounded  upon  any  lending,  or  con 
tract  without  specialty,  and  all  actions  of  debt  for  arrearages  of  rent, 
should  be  commenced  and  sued  within  six  years  next  after  the  cause 
of  such  action  or  suit,  and  not  after.  In  consequence  of  uncertainty 
as  to  whether  the  lapse  of  the  prescribed  period  merely  raised  a  rebut 
table  presum})tion  of  payment,  allowing  evidence  of  stibsequent  ac- 
knowledgment of  the  debt  by  the  debtor,  or  actually  closed  the  door 
to  enforcement  aiRl  precluded  evidence  of  nonpayment.— in  otJH-r 
words,  to  use  the  technical  terms,  whether  the  statute  was  on*-  of 

1  Eads  V.  Williains,  4  De  Gex.  M.  &  G.  674;   Soutlicomb  v.  Bishop  of  Excti  • 
6  Ilare,  213;   Hogan  v.  Kjie.  7  Wash.  r.O.'),  35  Pac.  30t>;    Rogers  v.  Saunders,  li. 
Me.  92. 

2  Williams  v.  Mitchell.  112  Mo.  3u0.  20  S.  W.  647;  Knight  v.  McKinney,  84 
Me.  107,  24  Atl.  744;  Wanniaker  v.  Van  Buskiik.  1  N.  J.  Kq.  68.");  Stover  v. 
DiireD,  3  Strob.  (S,  C.)  448. 

3  Auson,  Cont.  316;  Llanelly  Uailway  A:  Duck  Co.  v.  London  &.  N.  N\'.  Ity.  Co., 
L.  R.  7  H.  L.  550,  567. 

*  21  .Tac.  I.  c.  KJ. 
ST.LIM.— 1 


'1  THK    STATITK    oT    I  1  M  I  lA  TH  ).\S. 

p/YMurripftofi  or  of  reponr^ — a  hilci-  stiitiilt','  known  as  "lionl  Tonter- 
•  It'ii's  Act,"  disposed  of  (lio  (nicstioii  Itv  jnovidinfr.  in  I'lTcct.  that  the 
liar  of  the  slatnlo  niij^hl  bo  removed  li.v  a  new  pKnnise  or  acknowh'd}^ 
Mjt'nl  in  wrilinj;.  and  sij,Mied  l»y  llir  paiiv  lo  1m-  <liai>i<'d  (li('i('l»y ;  lun 
iM»t  otherwise.  It  did  noi  deal  wiili  iIm-  ctVcci  of  a  jiaii  pavnit'iit,  n(»i- 
ilcfine  h\  wlioin  it  ini;;h(  be  made,  nor  who  should  Im-  iiuund  lln'irbv. 
It  left  that  subject  to  be  rejiulated  by  the  courts.' 

Statutory  provisions,  generally  in  terms  similar  to  those  of  T/ird 
Tcuterden's  act,  have  been  adopted  in  all  our  states,  providing  tliat 
a<  lions  must  be  brought  within  a  certain  number  of  years,  or  be  barred. 
Snrh  statutes  are  known  as  the  "Statutes  of  Limitations."  The  time 
limited  varies  in  llie  dilVereul  states. 

2.     LACHES  IN  EQUITY. 

Irrespective  of  the  oiM'iation  of  statutes  of  limitation,  a  court  of 
equity  will  not  aid  a  party  whose  application  is  destitute  of  conscience, 
good  faith,  and  reasonal)le  diligeiue,  but  will  discourage  stale  de- 
mands, for  the  jieace  of  society,  by  refusing  to  interfere  where  there 
has  been  gross  ladies  in  i>i'osetuling  rights,  or  where  long  acipiies- 
cence  in  the  assertion  of  adverse  liglits  has  occurred.  The  rule  is 
jK-culiarly  apjdicable  where  the  dill'K  idiy  of  doing  entire  justice  ai'ises 
ilirough  the  death  of  the  princi]»al  |)articipants  in  the  transactions 
complained  of.  or  of  lh«*  witness  or  witn<'sses,  or  by  reason  of  the 
original  transactions  having  l»ecome  so  obscured  by  time  as  to  render 
the  ascertainment  of  the  exact  facts  impossible.  Kach  case  must 
tx'cessarily  be  governed  by  its  own  circumstances,  since,  though  the 
lajise  of  a  few  years  may  be  siiflicient  to  defeat  the  action  in  one 
can-,  a  longer  jh  i  iod  may  Ite  held  reciuisile  in  aiiotlu'r,  dependent  upon 
the  siiuaiion  of  the  jiaities.  ilie  extent  of  their  knowledge  or  informa 
tion.  gieat  changes  in  values,  the  want  of  pi'obable  grounds  for  the 
imputation  of  intentional  fiaiid.  the  destruction  of  specific  testimony, 
the  abwnce  of  any  reasonable  impedinienl  or  hintham  *•  to  the  assertion 
of  the  alleg.il  ri^ihis.  and  tlie  like.^ 

•  9  Geo.  IV.  c.  1  t. 

•  .Mtinl.*<k  V.  WHlcrrunn.  1  ir.  X    Y,  .",,  (11.  C,2,  ?i^  N.  K.  «21>.  Clilfty.  .T..  In  !{.• 
H..liinKhli.-,-i(I.  ;'.7  rh.  IHv.  <^'.1. 

T  Ilumuiuud  V.  n<.iikliiH,  U.".  L.  S.  -••Jl.  IJ.'.o,  111  Sup.  (Ji.  lib;    Marsli  v.  Wliil 


I,A(  lli;s    IN    Kyl'ITV.  .; 

Tims,  niidcr  llic  \;ir.viii^'  I'mis  nl'  ;ii\tii  ciiso.  ilir  ilm  nine  df  I.hIio 
has  been  aj)I)lie(l  lo  dchiii'  the  ('(iiii|i|;iiii;iiil  <.!  n  li.  r  ;ifi.i  lli<-  l;i|.f-.- 
of  seven, ^  five,"  four,'"  and  even  (wo  years." 

The  jiarly  wlio  appeals  (o  llie  conscience  of  tin-  (•li;iii<c|lur  in  «iip- 
port  of  a  claini.  wlinc  ilieic  lias  Imcii  lariics  in  |»iusccni in;;  it.  oi'  Ion;; 
acquiescence  in  Ihe  assertion  of  adveisc  ri^iJils.  sliduld  s<-t  foilli  in 
his  bill  si)eeitically  what  were  the  inipedinnnts  lo  an  <'ailier  prosecu- 
tion of  his  cUiiiu,  how  he  came  to  be  so  lon^  iirnnnnit  of  Ids  rights,  and 
the  means  used  by  the  resjjondent,  if  fraud  is  alleged,  to  l<i-c|i  liiin  in 
ignorance,  and  how  and  when  lie  tiist  came  to  a  kiiowh'd;:c  of  the 
matters  alleged  in  his  bill;  otherwis<'.  the  court  may  justly  refuse  to 
consider  his  case,  on  his  own  showiii.u,  even  though  the  laches  is  not 
pleaded  or  the  bill  demurred  to.* 

The  burden  of  showing  that  the  running  of  the  statute  of  limita- 
tions has  been  arrested  is  upon  the  plaint itV,  as  was  the  former  rub- 
in  equity,  t 

Apart  from  their  own  inherent  doctiine  of  laches,  as  above  stated, 
courts  of  equity,  in  cases  where  their  jurisdiction  is  concurrent  with 
courts  of  law,  consider  themselves  bound  by  the  statutes  of  limita- 
tion which  govern  courts  of  law  in  like  cases,  and  this  rather  in  obedi- 
ence to  the  statutes  than  by  analogy.'-     In  many  other  ( ases  they  act 

more,  21  Wall.  178;  Lansdale  v.  Smith,  lOti  U.  S.  HIH.  1  Sup.  Ct.  350;  Callili.r 
v.  Cadwell,  145  U.  S.  3G8,  371,  12  Sup.  Ct.  873;  Teuu  Mut.  Life  Ins.  C.i.  v.  City 
of  Austin,  168  U.  S.  685,  696,  18  Sup.  Ct.  223;  Murray  v.  Co.ster,  20  .loluis.  (N. 
Y.)  576,  58:?;  Decouche  v.  Savetior,  3  Johns.  Ch.  (\.  Y.)  1!:»0.  21(;:  Ilaiii.T  v. 
Sidway,  124  N.  Y.  538.  548-551,  27  N.  E.  256. 

8  Brown  v.  Buena  Vista  Co.,  05  U.  S.  157. 

»  Harwood  v.  Railroad  Co.,  17  Wall.  78;  Davison  v.  Davis,  125  U.  S.  Smi. 
8  Sup.  Ct.  825. 

10  Twin-Lick  Oil  Co.  v.  Marlnu-y,  91  U.  S.  587. 

11  Hols,'ate  v.  Eaton,  116  U.  S.  33,  16  Sup.  Ct.  224;  SoeiC't^  FoncI<Ve  et  Agri- 
cole  des  Etats  Unis  v.  Milliken,  135  U.  S.  304.  10  Sup.  Ct.  823. 

*  Marsh  v.  Whitmore.  21  Wall.  178,  185;  l>nn  MuL  Life  Ins.  Co.  v.  f'lty  of 
Austin,  168  U.  S.  685.  607,  18  Sup.  Ct.  22:*..  Compare  Macaulay  v.  Palmer.  125 
N.  Y.  742,  26  N.  E.  912;  Jackson  v.  Sackett,  7  Wend.  (\.  Y.)  04;  Bean  v.  Ton- 
uele,  94  N.  Y.  381. 

t  Mason  v.  Henry,  102  N.  y.  529,  539,  46  N.  E.  S:}7;  Baldwin  v.  Martin.  14 
Abb.  rrac.  N.  S.  (X.  Y.)  9. 

12  Badger  v.  Badger,  2  Wall.  87,  94;    Builer  v.  JoUusou,  111  N.  Y.  204.  213. 


4  THK    STATl'TK    OF    LIMITATIONS. 

Upon  i\w  ;m;il(.-y  of  (he  like  limilaliou  at  law;  '^  wliilc  in  soiiio  juris- 
dictions the  statute  of  limitations  inaki's  spciial  provision  for  actions 
in  (Mjuity.  but  in  such  cases  the  statute  merely  fixes  tlie  time  beyond 
whicli  the  claim  slinll  not  be  prosecuted,  but  does  not  dejirive  courts 
of  (Hpiiiy  of  thrir  power  of  refusins  relief  on  the  ground  of  laches,  even 
thouixh  tlie  time  fixed  by  tlie  statute  has  not  yet  expired.^*  Thus,  in 
New  York,  the  period  of  limitation  in  equitable  actions  is  fixed,  by 
Code  Civ.  Proc.  §  388,  at  10  years  after  the  cause  of  action  accrues.^* 


8.     STALE  CLAIMS  AT  LAW. 

As  already  stated,  delay  in  asserting  a  claim  mijiht,  at  common  law, 
raise  a  rebuttable  presumption  of  payment.  And.  notwithstanding 
the  adoption  of  statutes  of  limitation,  such  delay  is  still  evidence  of 
payment.  The  distinction  between  the  operation  of  the  statute  and 
of  tliis  presumption,  however,  is  that  the  former  is  pleaded  as  a  bar, 
wliile  the  other  raises  a  question  of  fact  for  the  jury.  The  former  is 
conclusive,  and  excludes  discussion  of  the  question  whether  the  debt 
has  in  fact  been  paid  or  not;  while  the  other  turns  on  the  question 
whether,  from  the  delay,  together  with  other  circumstances,  payment 
may  be  presumed.  If  the  jury  are  satisfied  by  such  evidence  that 
the  defense  of  itayment  is  made  out,  it  is,  of  course,  immaterial  that 
the  period  fixed  by  the  statute  of  limitations  has  not  yet  expired.' 


10 


18  N.  E.  G4;j;  In  re  Ncilloy,  95  N.  Y.  382,  390;  RoIktIs  v.  Ely.  11:5  N.  Y.  128, 
133,  20  N.  E.  C,()G. 

i«  Badger  v.  Badger,  2  WM.  87.  ^;  Murdock  v.  Watorniaii.  14."j  N.  Y.  5.").  01. 
.39  N.  E.  829;   Giles  v.  Barciiiore,  5  Jolins.  Ch.  (N.  Y.)  54.5. 

i«  C'alliouii  V.  Millard.  121  N.  Y.  09,  82.  24  N.  B.  27;  People  v.  Donohue.  70 
Hun,  317,  .322,  24  N.  Y.  Supp.  437. 

16  .Mason  V.  Henry,  ir>2  N.  Y.  .">2!>,  1(J  N.  K.  S.!7;  Ciiiiiniv  v.  II;mi.  112  N.  Y. 
1.  6,  W  N.  E.  82«;;    Exkorn  v.  E.xkorn,  1  App.  Kiv.  121.  :\1  S.  V.  Sn|.ii.  (;8. 

)«  H:dl  V.  I{nl)ertR.  «n3  Hun.  47.3,  479,  18  N.  Y.  .Siipp.  480;  Macanlcy  v.  Palmer. 
rSiip.)  0  N.  Y.  Supp.  404:  Id..  12.".  N.  Y.  744,  2(]  X.  E.  912;  2  Phil.  Ev.  171; 
Jackson  v.  Saekett,  7  Wend.  (N.  Y.)  94;  Bean  v.  Tonnele.  94  X.  Y.  .381;  Anon., 
0  .Mod.  22;  Oswald  v.  Ix'gb.  1  Term  R.  270;  Dullield  v.  Creed,  5  Esp.  .''.2; 
Perkins  v.  Kent,  1  Root  (Conn.)  312;  Daggett  v.  Tnllman,  8  Conn.  108;  Wells 
V.  WashiJigton's  Adm'r,  0  Munf.  (Va.»  :,:V2:  Has.s  v.  Bass,  8  lM<k.  (.Mass.)  187, 
S<-<'  Knight  V.  .McKinney,  84  Me.  107,  24  Atl.  744. 


IT    is    A    SIAIl   IK    (»!•     i;il'ii-r.  .J 

4.     IT  IS  A  STATUTE  OF  REPOSE. 

As  already  stated,  tlie  Kii-ilisli  statute  of  21  Jac.  I.  c.  10,  left  opon 
for  discussion  tlie  quest iou  whether  it  was  to  be  eousidered  as  a  stat 
ute  Avhieh  merely  created  a  presumption  of  paynxMit  after  the  la[)s< 
of  a  specified  period,  but  allowed  that  pn'suiiipunn  to  be  rebtittcd. 
or  was  a  statute  which  absolutely  barred  the  «'iif()r(fiii('nt  of  the  claiiu 
after  the  lapse  of  a  specified  period,  and  permitted  no  iinpiiry  into 
the  question  of  whether  it  had  in  fact  been  paid  or  not;  in  other  words, 
whether  it  was  a  statute  of  presumption  or  of  repose.    Tliere  was 
accordinji'ly,  a  lack  of  harmony  in  the  decisions  upon  this  question. 
Part  of  the  dilliculty  arose  out  of  the  early  concejttion  of  the  defense 
under  the  statute  as  one  which  the  courts  should  not  encourage,  and 
which  they  looked  on  as  unjust  and  discreditable;    and  accordingly 
they  were  inclined  to  admit  even  slight  evidence  which  would  s<'rve 
to  deprive  the  defendant  of  the  benefit  of  the  statute.^^ 

The  modern  view,  however,  has  been  that  the  statute  was  a  wise  and 
beneficial  law,  not  designed  merely  to  raise  a  presumption  of  pay- 
ment of  a  just  debt  from  lapse  of  time,  but  to  alTord  security  against 
stale  demands  after  the  true  state  of  the  transactions  may  liave 
been  forgotten,  or  be  incapable  of  explanation;  and  that,  anordingly, 
it  would  have  been  wiser  to  make  it,  what  it  was  intended  to  be, 
emphatically  a  statute  of  repose.^* 

As  above  stated,  this  view  was  subsequently  embodied  in  the  Eng- 
lish statute  of  9  Geo.  IV.  e.  14  (Lord  Tenterden's  Act).  American 
statutes  had  been  based  upon  the  earlier  English  statute.  Some  of 
the  state  courts,  in  construing-  their  own  statutes,  followed  the  Eng- 
lish precedent;  while  in  other  states  the  courts  construed  them  as 
statutes  of  repose.^^  Later  on,  the  subject  was  generally  dealt  with 
by  statutes  based  on  Lord  Tenterden's  act.  but  even  prior  to  that  time 
the  drift  of  the  American  decisions  was  in  favor  of  construing  the 

17  Bell  v.  Morrison,  1  Pet.  351-300. 

18  Bell  V.  Morrison,  1  Pet  351-360.  See  Woods  v.  Irwin.  141  I'a.  ^^t.  278, 
295,  21  Atl.  (»3. 

19  Clemeutsou  v.  Williams,  8  Cranch,  72;  Wetzeli  v.  Bussard,  11  Wheat  309; 
Bangs  v.  Hall,  2  Pick.  (Mass.)  3GS;  Sands  v.  Gtlston,  15  Johns.  (N.  Y.)  511; 
Bell  V.  Kowlaud's  Adm'rs,  Hardin  (Ky.)  301. 


(>  THK    STATUTK    «)(-'    LIMITATIONS. 

stiituto  strictly  as  one  of  ifiiosc  "  And  if  (lio  dooisions  in  a  <j;iv('n 
stat«'  constnuHl  a  loral  slainic  (if  liiiiilalion,  lli<»n;ili  similar  in  form 
t(»  ilif  earlier  Mn^'lisli  slafntc.  as  one  <tf  repose,  tlie  I'liiled  Slates 
eiiints  aii<)|pie(i  ilir  same  const  iiiciidM  wiili  resiiect  tci  i  lansai'l  ions 
;;o\erne(l  hy  ilie  laws  of  llial  stale. -'*^ 

6.     WHAT  IS  A  SUFFICIENT  ACKNOWLEDGMENT. 

Prior  to  the  i)assag:e  of  Tjord  Tontoiden's  art  in  En<;;land,  and  even 
in  cases  treating;  tlie  oailicr  slatntc  of  limitations  as  one  of  repose,  it 
was  always  held  that  there  were  certain  fatts  wliirh  mi;^lit  he  shown 
to  jirevenr  a  defendant  from  availing  liimself  of  tlie  statute  as  a 
l)ar  to  an  action  aj;ainst  him.  'J'lins.  an  aclcnowledj;incnt  of  the  debt 
by  the  debtor,  after  time  had  be<;un  to  rnn  nnder  the  statute,  was 
held  to  vitiate  the  effect  of  any  lapse  of  time  prior  thereto,  and  set 
the  time  rnnninfr  anew  from  that  date.  T?nt  jnst  what  sort  of  an 
acknowledjiiiient  wonld  snHice  for  that  pnrpose  was  not  very  clear. 
Many  cases  admitted  loose  and  <jjeiK.Mal  expressions  of  the  debtor, 
from  which  a  probable  or  possible  inference  mip;ht  be  deduced  of  the 
ac  knowled<;inent  of  a  del)t  by  a  court  or  jury,  so  that  any  acknowl- 
edgment, however  sli«,dit.  or  any  statement  not  amounting:  to  a  denial 
of  the  debt,  or  any  admission  of  the  existence  of  an  unsettled  account, 
without  any  sj)ecification  of  amount  or  balance,  and  however  inde- 
terminate and  casual,  was  yet  sullicient  to  take  the  case  out  of  the 
statute  of  limitations,  and  to  let  in  evidence  aliinid<»  to  establish  any 
debt,  however  large.  The  Kn«^lish  decisions  npoii  this  subject  had 
;:one  jrrcat  lengths,  and  in  some  instances  to  an  extent  irreconcilable 
with  any  just  principles.  Subsecpieiit ly  there  was  a  disposition  on  the 
p;n  t  of  the  c(niits  to  retrace  their  steps,  and  biiii^f  the  d(»cirine  back 
to  nitiunal  limit.'*,  and  it  was  held  that,  to  take  a  case  ont  of  the  stat- 
ute, ihei-e  must  be  an  niwpialilied  ;ickin»\\  lediinienl.  not  only  of  the 
dilit  ;is  oii;,MiialIy  due.  Init  tli:il  it  cnuliiiiied  <n.  ;iih1,  it  lliei-e  ha<l  been 
a  c(i;ii|it  iiin;d  prdiiiise,  tli;il  I  he  cundii  iun  had  Imch  performed. '-' 

J"  H.-ii  V.  MoiTisiiM,  1   r.-t.  ;;.".t  :!t;o;    ilhik-^  v.   it.iii.  i:  i'i.i<.  (M.iss.)  .^r.8: 

SiiihI.h  v.  (;«'lKt«iii,  1.'  .Inliiis.  (N.  Y.)  .".11;    Kcip.-r  v.  Wu.iil,    IS  Ohio  St.  r,l.',,  (;l»-J. 

in>  .N.  K.  rm. 

•  *  UHI  V.  .Morrison.  1  I'.-t.  :\r,\  :;c,(t. 

S2  B«ll  V.  .Morrison,  I   IVl.  ."..'.1  :!<;o;    }U\uk<  v.  H.-ill.  L'  I'l<-k.  (Mass.)  .'{OS;    In 


WHAT    IS    A    SUKlIt  IKNT    ACKNOWI.KIXJM  KNT.  / 

A  (lochinr  (inilr  ;is  coiniu  <li('iisi\  r  u;is  t-arl  V  ;i^si'i  I<<1  in  I  lie  siipr«'iii<- 
(•(Mii't  of  New  \'(iil\,--  ill  wliicli  if  was  s.iid  (li;il  "if,  ;i(  (In-  linn*  of  the 
{ickiiowlfd^iiiciii  of  (lie  ('.\is(('iic«i  of  (lie  (lol»t,  sik'Ii  nckiiowiiMl^finont 
\\;is  <|u;iiirnMi  in  a  \\a_\  l(j  icjicl  (Ik-  |iresninj»1i(>n  of  tin-  |ir«)iniw*  to 
pa}',  it  will  iKil  lie  ('\  idcncr  of  a  ]»ii>inise,  sunicicnl  lo  r«'viv<'  the  debt, 
and  take  il  out  of  (he  sla(n(e"";  and  in  accoid  wi(h  (his  piinriplc  the 
sjinie  court  hehl  tliat,  "if  (he  acknowlt'djinient  be  acronijianitMl  bv  a 
declaration  tlial  ilie  pariy  intends  (o  rely  on  the  statute  as  a  deferis<  . 
such  an  a(knowled;^inent  is  wholly  insu(1i<i»'n(." -* 

Various  courts  have  thus  stated  the  reijuisKe  ihara<tcr  of  an  ac 
knowledjjnient:  "If  there  be  no  express  promise,  but  a  promise  is 
to  be  raised  by  implicadon  of  law  from  the  acknowiedfjnnent  of  the 
party,  such  acknowlcdj;nient  ou^ht  to  con(ain  an  unqualified  and  direct 
admission  of  a  present  subsisting  debt,  which  the  parly  is  lialde  an<l 
willing  to  pay." -°  "The  acknowledgment  must  be  clear,  distiixM. 
and  unequivocal,  and  it  must  be  consistent  with  the  promise  to  pay."  ^^ 
The  writing,  in  order  lo  constitute  an  acknowledgment,  must  recog 
nize  an  existing  debt,  and  it  should  contain  nothing  inconsistent  with 
the  intention  on  the  i)art  of  the  debtor  to  pay  it.-'  "At  common  law 
the  admission  removed  the  bar  of  the  statute  only  when  it  was  of 
such  a  nature  that  a  promise  to  pay  might  be  inferred  from  it."  ^' 

Under  Lord  Tenterden's  Act  (9  (Jeo.  1\'.  e.  14),  Code  Civ.  Proc. 
N.  Y.  §  oH.",  and  otlu'r  stalutes  following  the  English  act,  the  new 

re  Kiver  Steamer  Co.,  6  Ch.  App.  832,  828.  See,  also,  Biddel  v.  Brizzolara.  t>4 
Cal.  354,  30  Tac.  609;  Heauy  v.  Schwartz,  155  Pa.  St.  154,  25  All.  1078;  Boynton 
V.  Moultun.  l.j'J  Mass.  248,  34  X.  E.  361. 

23  Bangs  V.  Gelston,  15  Johns.  511. 

24  Si'o.  also,  Brown  v.  Campbell,  1  Serg.  &  R.  (Pa.)  176;  Clenu-ntson  v.  WU- 
liains.  8  Crauch,  72;  Phelan  v.  Fitzpairick,  S4  Wis.  240,  ."4  N.  W.  614;  Perry 
V.  C'luslcy.  77  Me.  .".93;  Hussey  v.  Kirknian.  0."  N.  C.  6;'.:  Stiiffunl  v.  Rl(>hard- 
sou,  15  Wend.  (N.  Y.)  302;   Shoemaker  v.  Benedict.  11  N.  Y.  176,  1S3. 

25  Bell  V.  Moriison.  1  Pet.  351;  Russell  v.  Davis,  51  Miun.  482,  .">3  N.  W. 
766.     ("dinpare  Gay's  Estate  v.  Hassam.  G4  Vt.  495.  24    Atl.  715. 

2G  Keener  v.  Zartman,  144  Pa.  St.  179.  22  Atl.  889:  Rus-sell  v.  K.Tvis.  .".I 
Minn.  482.  53  N.  W.  766;  Chapmans  Appeal,  122  Pa.  St.  3:31,  15  Atl.  4<io. 
Compare  Custy  v.  Donlan,  159  Mass.  245,  34  N.  E.  360;  Boynton  v.  Moulton. 
159  Mass.  248,  34  N.  E.  361. 

2  7  M.iuchester  v.  Braedner,  107  N.  Y.  346-349,  14  N.  E.  405;  Wald  v.  Arnold, 
168  Mass.  134,  46  N.  E.  419. 

2  8  Henry  v.  Rue,  83  Tex.  446,  18  S.  \V.  8U6,  808;    Busw.  Lim.  £  42. 


3  TIIK    STATlITi:    OK    LIMIIATIONH. 

pmmiso  or  ncknowlcd^iuont  iniist  be  in  wiiiinu.  si-mil  iiv  (lie  party 
(o  be  thnrjuHl  fli«M'(>by.'"  Hut  oral  evidence  may  bo  icsoiicd  to,  as  in 
other  rases  of  written  instruments,  in  aid  of  tiie  intei'jtretation.  Con- 
sistently with  l]\\>  rule,  it  has  been  held  tliat  oral  evidence  is  admis- 
sible to  identify  the  debt,  and  its  amount,  or  to  lix  the  date  of  the 
writing  relied  upon  as  an  ackm^wled^ment,  when  the  cirenmslanees 
are  omitted,  or  expressed  ambijiuously.^" 

Althou;;!!.  as  above  shown,  it  is  sonieiimeH  said  that  the  promise 
must  be  untonditional,  this  term  does  not  exclude  as  insutVieient  an 
absolute  pioniise  to  pay  upon  the  happening;  of  some  eontinji;eney  or 
the  fuUilhnent  of  some  condition,  for  when  this  happens,  or  is  fulfilled, 
the  promise  then  becomes  absolute.  In  such  a  cas«'.  in  order  to  take 
advantarre  of  the  promise,  it  must  be  shown  that  it  has  thus  become 
o|H'rative.'' 

6.     WAIVER. 

The  t]ief»ry  on  which  an  acknow  le(l;;nient  or  new  piomise  takes 
the  debt  out  of  the  statute  of  limitations  is  sometimes  stated  to  be 
that  it  waives  the  bar  of  the  statute,  thoujj^h  it  is  admitted  that  this 
\iew,  paiticularly  when  the  so-called  waiver  is  made  before  the  period 
of  limitation  has  exjdred.  and  when,  accordin<;ly,  there  is  nothing;  to 
waive,  and  tlie  liability  is  undeniable,  is  not  free  fi-om  ditliculties.''- 
And  it  is  said  that  probably  the  doctrine  is  a  relic  of  the  time  when 
th«'  statute  was  rej^arded  with  disfavor,  and  evaded  as  far  as  pos- 
sible." 

ITie  term  "waiver''  is,  however,  sometimes  used  in  another. sense, 
as  ref«rrin;;  to  a  c(uitract  by  the  debtor  with  the  creditor  not  to 
avail  himself  of  the  henelit  of  the  statute,  in  return  for  an  extension 
of  time  to  pay,  or  oilier  beinlit   jiassin;;  fmm  the  crediii>r; ''*     while 

»•  S«i'  I'liinrsou  V.  Ni'iii-r.  !«;."»  l'n.  .Si.  W.  7.;,  'M  All    Tts. 

>«  .MniKliihter  v.  Urmdner.  107  X.  Y.  .'ilt*  ,'A'J,  11  .\.  K.  -Hh',;  Kin«!ii<1  v.  Ardil- 
I'ald.  73  N.  Y.  IW);  Li'chiinTf  v.  netcht'r.  3  Tyrw.  •l.">0;  HIrd  v.  (;:iiuiiinii.  3 
Hlng.  (N,  C.)  883;    1  Smith.  Ix?ad.  Ciis.  '.HVt,  and  .uses  cited. 

»>  Wnkitiinii  V.  .Slicniiaii.  0  .\.  Y.  8.');  Hoyutoii  v.  .Moiiiton.  l.iK  .M;iss.  L'ls.  34 
N.  i:.  ;5<;i;    I'jirk«T  v.  iJuttcrwortli.  40  N.  .1.  Ijiw.  LM  I. 

"»\Vnld  V.  Arnold.  IIW  Mann.  13^1.  4«;  .\.  i:.  ll'.t;  ilslcy  y.  Jcw.Hl.  3  .M.lo. 
<Mhwi.)  4:',U.  •H.'i;   BIkcIow  v.  Norrls.  i;i;»  .Mass.  IL'.  I'll  N.  E.  01. 

^>  Walil  V.  Arnold,  ItW  .MaH».  i;jl,   »0  N,  E.   ll'j. 

•  •  WetzvU  T.  Hu«Hard,  11   Wheat.  3(J0. 


WHAT    IS    PAItT    I'AYMKNT. 

sometimos  <lic  binding  cfTccl  of  u  uiiist-r  is  exi)Iainnl  (»ii  tin-  iIk-imj. 
of  estoppel.^* 

7.     WHAT  IS  PART  PAYMENT. 

Ar  already  stated,  Lord  Tentcrden's  ad  did  not  (l<;il  wilh  the  i-iftH-t 
upon  the  runninj,'  of  the  time,  under  the  sl;i(ii(c,  of  a  part  iMynicnt. 
And  the  same  proposition  is  true  of  many  American  statutes  foundi  <i 
upon  the  Euf^lish  statute.  Tims  tlie  New  York  statute,  after  dechir 
ing  that  au  acknowled<;ment  or  promise  in  writing,  signed  by  th- 
party  to  be  charged  thereby,  is  the  only  competent  evidence  of  ;i 
new  or  continuing  contract  whereby  to  take  a  case  out  of  the  oper;i 
tion  of  the  provisions  relating  to  limitations,  adds  that  "this  section 
doi'S  not  alfri'  the  eilect  of  a  payment  of  principjil  or  interest";** 
thus  leaving  the  ell'cct  undefined,  and  to  be  determined  by  the  prin- 
ciples established  by  the  decisions  of  the  courts  ap]tlical)le  to  th-' 
subject.*^ 

Partial  paym<mts,  which,  as  well  as  formal  acknowledgments,  rii.i_\ 
be  relied  upon  to  take  a  case  out  of  the  statute,  are  not  in  reality 
entirely  distinct  from  acknowledgments  of  an  existing  indebtedne.^- 
but  are  to  be  regarded  as  meie  facts  from  which  an  admission  of  the 
existence  of  the  entire  debt  and  the  present  liability  to  pay  may  be 
inferred.  As  a  fact  by  itself,  a  payment  only  proves  the  existence 
of  the  debt  to  the  amount  paid;  but  from  that  fact  courts  and  jmies 
have  inferred  a  promise  to  i)ay  the  residue.  But,  in  any  view,  it  is 
only  reliable  as  evid<nce  of  a  j)romise,  or  fiom  which  a  jir(»mise  may 
be  implied.  Any  other  evidence  which  establishes  sucli  a  {uomi.'ie 
may,  apart  from  the  ojieration  of  any  statutory  re<|uirement  of  a 
special  form  of  acknowledgment  or  promise,  be  e(pially  eilicaciouH. 
In  any  case  the  question  is  as  to  the  weight  to  be  given  to  evidence, 
and,  if  a  new  promise  is  satisfactorily  proved, — as,  for  examph'.  by  tip 
fact  of  the  partial  payment, — the  debt  is  icnewrd.  and  without  a 
promise,  express  or  implied,  it  is  not  renewi'd.'*'' 

Where  a  partial   i»ayment   is  maile  on  acc<»unt  of  an  existing  in 
debtedness,   the   whole  debt   upon    which   smh   payment   is   made   is 

SB  Utica  lus.  Co.  v.  Bloodgood,  4  Woud.  <N.  Y.)  652. 
30  Code  Civ.  Proc.  §  3i>5. 

3T  Murdock  v.  Waterman,  145  N.  Y.  53.  G2.  TO  N.  E.  SID. 
«s  Shoemakur  v.  Beuedict,  11  N.  Y.  17G,  1S5. 


m  THK    STATUTK    OK    1,1  M  ITA  I  H  i.NS. 

llni»l(\  tJlKni  (lilt  (if  the  sl;iliit(^  of  liliiit;il  iolis  ll|i  In  lli;i(  liliif.  'IMh' 
I'lviin'iil  is  ;iii  ;nkii(»\\  lt<|;;iiHlil  of  iiii  rxistiii;;  ilidclttcdin'ss,  ;iim1 
i;ii>ts  Mil  itniiliid  |iromisc  at  tliiii  liiiio  to  |i;iy  the  liiilanco.^"  In 
tinier  to  Iiii\t'  that  ••iVfil.  it  imisi  not  oiilv  apiirar  fliat  a  pavmriif 
\va-«  ma<U'  on  accoiint  of  a  "Idit.  Imt  al-o  on  acfoiiiit  of  ////  dchl  for 
\\lii«h  a<(ion  is  lnjiu^'ht.  ami  lliaf  \hv  i»a.viii»nt  was  made  as  part  of 
a  larj^cr  indcbtrdm'ss.  and  under  such  circnmstaiices  as  will  warrant  a 
jury  in  fiixlin}!  an  iinplio<l  promise  to  pay  the  l>alaneo.*° 

If  it  l»e  doulitfnl  uhttlirr  a  payment  was  a  pari  payment  of  an 
existinfi  del»t.  mole  licin;:  admitted  to  be  due,  or  whether  the  pay- 
mi'nt  was  intended  by  the  party  to  satisfy  the  wliole  of  the  demand 
a^'ainst  him.  the  payment  tannot  operate  ns  an  admission  of  a  debt, 
so  as  to  extend  the  period  of  limitation.  If  there  be  a  mere  nak(Hl 
payment  of  money,  without  anything  to  show  on  what  account  or 
for  what  reason  the  money  was  paid,  the  payment  will  be  of  no  avail 
under  the  statute.*^ 

The  provisions  of  the  New  Yorlc  Code  chanfje  neither  tlio  nature 
nor  the  elTect  of  payment  of  interest  or  principal,  nor  introduce  any 
rule  of  evidence  in  re«;ard  to  the  establishment  of  the  same,  different 
from  that  existing;  before  the  adojition  of  the  Code,  and  tlie  payment 
need  not  be  evidenced  by  writinj;.'*' 
/'<i>///i'/if  on  ^Vdf'.s   or  Bills. 

To  make  an  indorsement  of  princii)al  or  interest  upon  a  note  ad- 
missible in  eviden<<'  at  all.  it  must  Im'  pi'oved  to  have  been  made 
before  the  pr«sumption  of  payment  attached  by  la|>se  of  time;  in 
other  wolds,  the  indorsement,  which  is  only  evidence  of  the  pay- 
ment, must  appear  to  have  been  made  by  a  creditor  at  a  time  wiieii 
he  had  n«»  moti\e  to  ;;ive  a  fals^.- credit,  and  at  least  befoie  the  statute 

•  •Day  V.  Mayo.  ITA  Mass.  471:,  13>  N.  K.  X»n;  I.mii;,'  v.  c;:ij,'.-.  GT.  N.  II.  173, 
18  AU.  7lXi. 

«o  Crow  V.  GleaHon,  Ml  N.  V.  !S;»,  49;j,  3G  N.  K.  •I!t7. 

<>  1  Woi.rl.  LIm.  L'71;  Alil..  Tr.  Kv.  S2I:  Ilarpir  v.  Tairl.'y.  M  N.  Y.  -142; 
All>r<»  V.  1Iku<  ra.  \'*)  N.  Y.  «i:;o;  .^mlth  v.  Uyaii.  »',(;  N.  V.  .I.VJ;  A<laiiis  v.  Ollii, 
140  N.  V.  100,  3o  N.  K.  448;  Ilalm-s'  Adin  r  v.  Walls'  Ailiiir,  .".:{  X.  J.  I.aw. 
4.V..  1:1  All.  10.'{i:;  Hamilton  v.  Cnttlii.  4.'".  Kan.  .V.O,  JC  I'a.-.  VJ,;  U.  S.  v.  Wilder, 
13  Wall.  I'.VI,  •^A\. 

•  »  In  r»-  Hcaniinn'K  KKlate  tSur.)  11)  N.  Y.  .^upp.  .'».'{();  Mills  v.  DavlH,  \V.\  N. 
Y.  240.  '2\  N.  E.  <;h;  C'lcavc  v.  .Ion«-».  (}  K.\ch.  .":'.;  First  Nat.  Hauk  of  Utica 
V.  Ilnllou,  4U  N.  Y.  IW;   Anthony  v.  I'ritts,  45  N.  .F.  Law,  1. 


WHEN    MUST    ACKNOWI.KIXiMKNT    <»U    I'AVMKNT    UK    MAhU  Jl 

(tf  liiiiilMlioiis  li:i(l  cifMlcd  ii  lnii'/'  I'.iil  wIhti'  il  Hatinfiictorilv  aji 
jjcars  tliiit  an  iiKloiscuiciil  was  iiiadcal  a  tiim-  \nIm-ii  il  could  be  UKaiiiHf 
the  inlcicsl  of  (lio  iiaily  iiialun;;  it,  it  will  fiiiniKli  rvidcMn**  for  lh<' 
coiisidcialioii  of  liir  iiial  coiiil  of  iiavmoiil  aicuidin^  to  itn  toiiiiH.** 
}U\[  wlu'ie  an  indorsement  of  payment  is  made  l»y  the  artiinl  author 
i/a(ioii  of  l)o(li  i)arti('s  to  tlic  not*-,  it  may.  tn;,'ii|icr  with  other  farts 
siii)})or(in;i  il  as  ovidcncc  of  ;in  aiknow  led^imint  of  an  existinj,'  d»'M. 
be  relied  on  to  lal<e  the  case  uiil  n\'  llie  slaiuie.  even  lliiiii;,'h  it  was 
niaile  aflei'  the  slalulory  perind  had  expired. ^^ 

8.   WHEN  MUST  ACKNOWLEDGMENT  OR  PAYMENT  BE  MADE. 

It  is  not  necessary  that  an  acknowledgment  or  partial  payment. 
in  order  to  take  a  case  out  of  the  statute  of  limilaiion.s.  should  1m 
made  before  the  full  time  fixed  by  the  statute  has  elapsed.  It  m.w 
be  made  either  while  the  time  is  running  or  after  the  time  has  full\ 
expired.  The  reason  is  that  in  any  case  the  acknowledgment  or  pa.\ 
ment  docs  not  properly  revive  the  original  contract,  so  that  an  action 
may  be  mainlained  thereon  after  the  statutory  period  of  limitation 
has  exjtired;  but  it  constitutes,  or  is  evidence  of,  a  new  promise  to 
pay  the  debt,  upon  which  new  promise  the  action  is  to  be  brought. 
The  consideration  for  such  a  promise,  either  express  or  implied,  in  to 
be  found  in  the  moral  obligation  of  the  debtor  to  pay  the  debt.  The 
statute  does  not  wipe  the  debt  out  of  existence  after  the  laftse  of  the 
slalulory  period,  l)ut  merely  prohibits  its  enforcement  by  action:  in 
other  words,  the  statute  relates  merely  to  the  remedy.  Tlie  debt, 
therefore,  thus  continuing  to  exist,  furnishes  a  suflicient  basis  for  a 
new  agreement  to  pay  it.  After  the  statutory  period  of  limitation 
has  expired,  therefore,  an  action  may  be  maintained  upon  the  new 
promise  by  proof  that  such  promise  was  made  either  before  or  after 
the  statutory  period  had  expired;  and,  for  the  same  reason,  as  soon 
as  the  new  promise  is  made,  the  statute  again  begins  to  run  against 
it,  and  the  action  based  upmi  it  must,  therefore,  be  l>egun  before  the 

<-  In  10  lleaiinans  Estate  iSur.)  lit  N.  V.  Supp.  .>!"J;  Hos.'luKim  v.  HlUinjjion. 
17  Johns.  (N.  Y.)  182. 

<■*  Roseboom  v.  Billiuirtun.  IT  .Tnhns.  (N.  Y.)  181,';  In  re  lU-aniiau's  Ej.tate, 
(Sur.)  19  N.  Y.  Supp.  'kW. 

46Bouton  T.  Hill.  4  .\pp.  Div.  2r.l,  i;i>  N.  Y.  Supp.  498. 


12  TIIK    STATITK    OK    I  I M  1  1  ATIONS. 

statiitorv  jK-riod.  willi  icfcit  iico  to  such  new  promiso,  h:is  oxpire^. 
Tims,  if  the  jH'riod  of  liinilation  is  six  vears.  and  a  new  promise  is 
not  made  until  the  end  of  the  seventh  year,  an  action  may  be  main- 
laintKl  thereon  within  six  years  from  the  time  of  the  makin«^  of  the 
new  promise.** 

0.  PAYMENT  NEED  NOT  BE  MADE  IN  MONEY. 

A.  payment.  sHfliciont  to  take  a  ease  out  of  the  statute  of  limita- 
imus,  n»'«'d  not  be  made  in  the  form  of  money.  Thus,  for  exanijde, 
\N  here  a  claim  arose  in  1878,  and  .in  18^!^{-84  work  was  performed 
by  the  debtor  for  the  creditor  under  an  agreement  that  the  amount 
thereof  should  be  credited  ujion  the  account,  and  credits  were  given 
accordingly,  such  credits  were  held  to  take  the  case  out  of  the  oi)era- 
tion  of  the  statute.*' 

So,  delivery  by  a  debtor  to  a  creditor,  of  the  note  of  a  third  person 
as  collateral  to  the  j»ayment  of  liis  debt,  is  equally  significant  as  an 
acknowledgment  by  the  debtor  of  his  liability  for  the  whole  demand 
an  would  be  a  cash  payment  of  a  like  amount.*' 

So,  the  delivery  to  the  creditor  of  a  policy  of  life  insurance,  or  of 
the  renewal  certificate  of  such  policy,  as  collateral  security  for  the 
payment  of  the  debt,  is  sullicient  to  constitute  a  renewal  of  the  debt, 
and  the  statute  will  begin  to  run  fiom  the  lime  of  such  delivery.  The 
theory  ui>on  which  the  delivery  of  the  policy  .saves  the  ojieration  of 
the  statute  is  that  the  debtor,  by  such  act,  acknowledges  the  debt,  and 
evinces  a  willingness  to  pay.*' 

So,  also,  if  one  gives  his  note  for  an  aniount  conipulcd  by  the  cred- 
itor to  be  due.  but  which  the  dchior  claims  to  be  incorrect,  and  it  is 
then  agreed  that,  if  a  recoinputation  shall  show  the  amount  to  be 
loo  large,  the  error  may  be  corrected,  a  subsequent  indorsement, 
dated  back  to  tlx*  date  of  the  note,  of  an  amount  in  which  it  was  sub- 
B4'<pn'ntly  ascertained  that  the  note  was  actually  excessive,  constitutes 
Buch  a  part  jKiyment  of  the  note  as  to  take  the  case  out  of  the  stat- 
ue SluHiiuikLT  V.  Bcuedkt,  11  ^.  Y.  17a 

«T  Lawr.-iKT-  V.  niirrliiKton.  llil'  N.  Y.  408.  2r.  N.  E.  |(h;;  Mansuii  v.  L.iiicL-y, 
84  Ml'.  :'^),  IM  Atl.  S8<i;    IJoOger  v.  Ai.h.  10  Kxcli.  :{33. 

««SrnllJi  V.  nynn.  W  N.  Y.  3r.2. 

«»  .Mill,  r  V.  .M;iKe.'.  41i  Iliin,  (jlO,  2  S.  Y.  .Supi).  I.-»«. 


I5Y    WHOM    ACKNOWLEDGMKNT    MUST    BK    MAUK.  13 

uto.  Such  an  iiKioiscincnt  r'-jucscnls  no  iniual  itajmiont  upon  flie 
note,  1mi(  ji  mere  correction;  Itiit  tlu'  dilTcrence,  if  any,  that  Khonid 
be  foiiiid  to  exist  Ix'tween  the  face  of  the  note  and  tlio  actual  aiiionnt 
due  the  creditor,  beinj;  such  that  the  debtor  coulil  assort  it  as  a  de- 
fense pro  tanto  to  an  action  upon  the  note  brouj,'ht  a^ainBt  him, 
such  difference  constitutes  a  claim  or  (ndit  in  favor  of  the  de- 
fendant ajjainst  the  plaintiff,— soinethin<;  which  couUl  be  applied  in 
partial  reduction,  extinynisliinent,  or  payment  of  the  uole.''^ 

10.     BY  WHOM  ACKNOWLEDGMENT  MUST  BE  MADE. 

By  Joint  Dehior. 

Much  discussion  has  arisen,  and  some  difference  of  opinion  has 
existed,  over  the  question  of  the  i»ower  of  one  joint  debtor,  under 
certain  circumstances,  to  bind  the  other  by  makinj,^  an  acknowled*;- 
meut  of  the  existence  of  an  indebtedness.  The  controlling'  principle 
by  which  all  such  cases  should  be  tested  is  this:  That  an  acknowledg- 
ment, in  order  to  deprive  a  debtor  of  his  defense  under  the  statute 
of  limitations,  must  have  been  made  by  him  or  by  his  authorized  agent. 
Thus,  if  such  agency  does  in  fact  exist,  one  joint  contractor  may  make 
payments  as  agent  for  all  the  contractors,  or  a  principal  debtor  may 
make  payments  for  and  in  the  name  of  his  surety  as  his  agent,  or 
payments  may  thus  be  made  in  the  name  of  all  the  joint  conlractore 
or  of  the  surety  without  previous  authority,  but  they  must  be  subse- 
quently ratified;  and  in  all  such  cases  the  running  of  the  statute  may 
be  i)ievented.  But  in  all  cases,  to  make  the  payments  efTective,  they 
must,  by  previous  authorization  or  subsequent  raiitication,  be  the  pay- 
ments of  the  party  sought  to  be  affected  by  them." 

A  partial  payment  by  a  stranger,  or  by  a  person  not  authoriz«-d 
to  represent  the  debtor,  offers  no  ground  for  assuming  any  pa\-ment 
on  the  part  of  the  latter  or  for  inferring  a  new  promise  by  him  to  pay 
the  balance  of  the  debt;  and  the  pa>inent,  not  being  luiide  by  the 
debtor  or  by  his  authority,  canitot,  therefore,  arrest  the  running  of  the 
statute.      But  in  the  application  of  the  doctrine  that  a  part  payment, 

00  Bouton  V.  Hill,  4  App.  Div.  2r.l.  38  N.  Y.  Supp.  498;  Amos  v.  Smith.  1 
Hurl.  &  C.  238. 

61  McMulIcu  V.  Raffeity,  Si)  N.  Y.  4oG,  400. 


1  J  THK    STATUTF.    OK    LIMITATIONS. 

witliin  tli«>  sImIuIo.  must   l»r  iiuidt'  by  llic  dclilor  or  by  liis  ;inlliority, 
(hero  has  been  iimcli  diversKy  of  judicial  opinion. '- 

I'rior  to  iho  d('<ision  of  Van  Knirrn  v.  rarniclcp,''^  it  was  well  sct- 
llfd  tlial  iiayiiMMits  or  jiclviiowlrd^nii'iits  by  one  of  several  iiiakcis  of 
a  inomissoiy  note,  iiiadr  before  tlic  sialutr  of  limitations  had  barred 
aiL  action  upon  it,  mi;,dit  ju-evcnt  the  statute  of  limitations  from  at- 
taching; to  the  demand,  on  the  <:round  that  by  the  joint  contract  there 
was  a  unity  of  interest  by  which  a  (piasi  a^^cncy  was  created  between 
the  contractors,  so  that  tlie  admission  or  promise  of  one  would  bind 
all.'*     And  so  in  other  states.""* 

The  A'an  Keiircn  Case,  sujira,  held  that  an  a(kiu)wl(Mlfruu>nt  and 
promise  to  pay,  made  by  one  partner  after  the  dissolution  of  the  firm, 
would  not  revive  a  debt  against  the  tirm,  which  was  barred  by  the 
statute  of  limitations,  on  the  theory  that  the  dissolution  of  the  part- 
nership terminated  the  agency  of  each  partner  to  bind  the  others. 
Til  Shoemaker  v.  Benedict  ^^  the  (piestion  was  presented  whether  the 
joint  contract  creates  an  agency  in  one  of  several  joint  debtors  to 
continue  a  debt  or  renew  a  debt  already  barred  against  all,  and  ])re- 
vejit  the  statute  of  limilatimis  from  attaching  by  a  new  promise,  ex- 
I»iess  or  implied;  or,  in  other  words,  whether  such  joint  debtor  is 
authorized,  by  virtue  of  his  relation  to  the  parties,  to  make  snch  new 
<untract.  which  shall  bind  them  all.  It  was  held  that  a  new  promise 
and  a  partial  payment  botli  stood  on  the  same  fooling,  the  latter 
being  available  merely  as  a  fact  from  which  an  admission  of  the  exist- 
ence of  the  entire  debt  and  the  present  liability  to  jiay  may  be  in- 
ferred; and  also  thai  a  promise,  made  wiiih-  the  statute  of  limita- 
tion was  running,  is  to  be  construed  and  acted  upon  in  the  same 
manner  as  if  made  after  the  statute  had  attached,  and  that  the  partial 
payment,  or  an   a<knowleilgment    by  one  of  two  joint  debtors,  did 

"  Mindock  v.  Waterman.  11.".  N.  V.  :.0  li^i,  .','J  S.  E.  S2'.\;  Knuw  v.  Craiir. 
14  App.  Dlv.  IL'O,  43  N.  Y.  Siipi'   •'>l.'i. 

»»  2  N.  Y.  '>'S',. 

s«  Whltcoiiili  V.  Whiliiit,'.  ii  IxxiK'.  ';•'►-:  I'all.isoii  v.  ("lin.-ite,  7  Wciid.  (X.  V.) 
441;   Ilummon  v.  lluiUley.  4  Cow.  (N.  Y.)  41K',. 

ii  Moore  V.  CJoodwIn,  KKJ  N.  ('.  '-MS.  i:;  S.  K.  TT'J:  Sipmnicy  v.  I  miry.  U 
ri(k.  (.MM.K.S.)  liHl;  IVrhHiii  v.  It.iviial.  '2  Uiii;;.  'Mx;-,  I'ikc  v.  W.irnn.  1.".  .Mr. 
3U'{;  .loslyn  v.  Smith,  l.'i  Vt.  .'Cm;;  Sli.-itnii  v.  ("ockc,  ;{  .M\mf.  (Va.)  t!»l;  JJcii/.  v. 
Fuller.  1  .McConI  iS.  C;  .".41;   .simpsou  v.  Geddrs,  li  Hay  (S.  C)  533. 

i«  11  N.  Y.  lT<j. 


15Y    WHOM     AlKNoWLEDGMKNT    MIST    W.    MAhl..  1 

not  deprive  tlie  otlier  of  his  (Icfcnsc  lliat  (1h-  ihiiiii  \\;is  Imirccl  liv  ili. 
statute.''^ 

At  common  law,  and  in  soine  of  the  slnlcs  wIkmc  llic  coniiiion  law 
rule  prevails,  a  distinction  is  made  between  those  canes  in  which  part 
payment  is  made  by  one  of  several  promissors  of  a  note  before  the 
statute  of  limitations  has  attached  and  those  in  which  a  i)aymeiit   is 
made  after  the  comi)letion  of  the  l)ar  of  the  statute;    it  bein<:  liel<l 
in  the  former  that  the  debt  or  demaiKl  is  kept  alive  as  to  all.  iiiwl  in 
the  latter  tliat  it  is  revived  only  as  lo  ihc  party  iiial<in;:  tin-  pa\im-iii.' 
The  reason  of  this  distinction  lies  in  the  principle  that,  by  withdraw 
ing  from  the  joint  debtor  the  protection  of  the  statute,  he  is  subjecierl 
to  a  new  liability  not  created  by  the  original  contract  of  indebted 
ness.°° 

£1/  a  Partner. 

The  i)art  payment  of  a  partnership  debt  by  one  partner,  while  the 
partnership  is  still  in  existence,  will  take  the  case  out  of  the  statute 
of  limitations  as  aj;ainst  the  other  partners,  as  well  as  a^aii»st  ili'- 
partner  making  the  ])ayment;  for  as  to  matters  pertaining  to  Hi- 
partnership  business,  and  while  the  i)artnership  relation  continue-, 
the  act  of  one  of  the  members  of  a  firm  is  the  act  of  all.'* 

-ffy  an  Exeauior. 

An  acknowledgment  by  an  executor  cannot  amount  to  a  contract 
which  will  bind  the  estate  of  the  testator.  It  is  no  part  of  the  duty 
of  an  executor  to  subject  the  estate  of  his  testator  to  a  demand  from 
which  it  was  by  law  exempt. ^^ 

5"  See.  also.  Lewis  v.  Woodwortli.  2  X.  Y.  r)i2. 

58  I'arker  v.  Butlerworth.  4(j  X.  J.  Law.  244.  2."il:  Atkins  v.  TreclpiM.  2  B.nni 
&  C.  23;  Moore  v.  Beaman.  Ill  N.  C.  328,  H!  S.  E.  177:  Sigourney  v.  I»ruiv 
14  Pick.  (Mass.)  387-391;   Ellicott  v.  Xichols.  7  (V\\\  (Md.i  85. 

6  9  Cross  V.  Allen,  141  U.  S.  528-r.3a,  12  Sui).  Ct.  67. 

80  Harding  v.  Butler,  156  Mass.  34.  30  X.  E.  1»JS.  Coiiii)arc  Siinpsoii  v. 
Geddes,  2  Bay  (S.  C.)  5;^-!:  Sage  v.  Ensign.  2  Alien  iMass.i  245;  Tappan  v. 
Kimball,  30  N.  H.  136:  Keriier  v.  Wood.  4S  (Hil.)  St.  6I;:.  21>  X.  E.  .'Hd:  M.rritt 
V.  Day,  38  N.  J.  Law.  :!2. 

ci  Bloodgood  V.  Bnien.  S  X.  Y.  362.  370:  Mooors  v.  White.  6  .Tolnis.  t  h.  (N.  V.) 
373. 


ir.  TUF.    STATITK    OK    MMITATIONS. 

/>' //  Iffirs  of  ^lortcjnged  Prrm  ixrs. 

WIhtc  one  wlio  owns  real  cslalo.  niton  wliirh  lie  lia^  jilaccd  a  niort- 
;.'a;:«',  convoys  a  iimiion  tlicroof.  and  dios  intostalo.  a  payincnl  tliore- 
aflt-r  by  his  heirs,  in  whdiii  liic  ifiiiaininu'  pari  <>f  liif  ni(>rti:a<i;od 
promises  has  vested,  does  not  take  out  of  tlie  statute  the  chiim  of 
the  niortjra;j:ee  under  bis  mortp:a«;e  upon  the  otlier  part  of  the  prem- 
ises conveyed  to  a  third  person,  who  assumed  no  duty  in  respect 
thereto,  and  was  undtr  no  oliliuation  to  ])ay  Ilic  (Irltl ;  tor  the  heirs, 
in  such  a  case,  are  in  no  respects  agents  of  the  liiird  paity. 

By  a  Mortgagor. 

It  has  been  held  that  a  partial  ])ayment  by  a  mortgagor  on  the  debt, 
even  after  he  had  conveyed  the  premises  mortgaged,  would  continue 
ilie  lien  of  the  mortgage;'-  for  the  mortgage  is  an  incident  to  the 
(Iclit.  and,  when  payments  are  ma<le  by  the  debtor,  the  mortgagee  is 
not  called  upon  to  inquire  how  the  mortgagor  has  dealt  with  the 
equity  of  redemption.  But  upon  the  death  of  a  mortgagor  person- 
ally bound  to  pay  the  debt  a  new  situation  arises,  as  already  seen. 
His  personal  representatives  become  liable  to  the  extent  of  the  per- 
sonal assets.  If  the  mortgaged  premises  descend  to  his  heirs,  or  are 
devised,  they  are  the  primary  resort  in  exclusion  of  the  personalty, 
iirdess  (in  case  of  a  will)  the  testator  otherwise  directs.  If,  during  his 
life,  the  mortgagor  has  conveyed  the  e(iuity  of  redemption,  his  grantee 
does  not  become  personally  liable  for  the  debt,  unless  he  assumed  this 
payment,  for  the  land  remains  subject  to  the  pledge,  whatever  may 
Im-  the  form  of  the  conveyance.  Rut  upon  the  death  of  a  mortgagor, 
after  having  conveyed  the  land,  the  ])erson  liable  is  sepai-ated  from 
the  ownership  of  the  land.  Where  ilir  ((piity  of  redemption  has  been 
convi'yed  in  parcels,  without  any  jx-rsonal  obligation  of  the  grantees 
to  pay  the  debt,  the  land  alone,  as  betwei'u  them  and  the  mortgagee, 
is  liable.  Tlie  owner  of  one  of  the  parcels,  acting  separately  and  in- 
<!<  pendent ly  of  tin-  owners  of  other  parc<'ls.  cannot.  ]»\  |»ayincnt.  con- 
tinue the  lien  of  the  mortgage  beyond  110  years  upon  ilie  other  jiai-cels, 
because-  he  doe.s  not  control  tlie  owners  of  th<'  other  parcels.  So,  with 
jiayment  by  an  heir  or  devisee  as  such.     His  a(  knowledgment  would 

«i  .New  York  Lift-  Insiirnncc  &  Tru.st  Co.  v.  Covert,  0  Abb.  Priic.  N.  S.  (N.  Y.) 
l.M:  IIukIkh  v.  Kdwurda,  y  Wheat.  4SU;  Murdock  v.  Wuterinan,  145  N.  Y.  55, 
r>;.  J/j  N.  E.  SLIi. 


I!Y    WHOM     A<  KNOWI.KDti.MKNT    MUST    UK    MAOK,  17 

conliiiuc  his  lialiilitv  iiiHlcr  iIk'  >t;ilulc  i<\  llic  cxtciil  (if  tin-  r<-;il  aswlH 
in  his  hands,  but  Mould  li;i\c  no  illVcl  ;i;^:iiiisl  ihi'  owihis  of  the 
equity  of  i-odi'inplion  in  .suspending  llio  niiinin;,^  of  the  slntiilc''^ 

Effect  on  Surth/. 

At  common  hiw,  a  ]>iiyment  made  upon  Ihc  note  by  ilic  prinripal 
debtor,  before  I  he  coniph'lion  of  tlie  bai-  of  (he  slat  ale.  seived  to 
keep  the  debt  alive,  both  as  to  the  debtor  and  the  siirrfiy."*  The 
same  rule  prevails  in  many  states  of  the  Union,*  and,  unless  the  com- 
mon-law rule  has  been  changed  by  statute  in  a  state  whose  hiws  control 
in  a  given  case,  this  principle  will  be  apjilied  l)y  the  Tnited  Slates 
courts."' 

Nor  does  the  death  of  a  surety  befoi-e  (he  demand  tuatmes  make 
any  difference  in  ]>iin(i]tle,  where  the  Iiabili(y  is  no(  (»f  a  personal 
nature,  but  is  an  incumbrance  upon  the  suie(y's  property;  for  while 
there  is  authority  holding  that  payment  of  interest  by  the  princijuil 
debtor  after  the  death  of  the  surety,  but  before  the  statute  of  limita- 
tion has  run  against  the  debt,  will  not  prevent  the  surety's  executors 
from  pleading  the  statute,®®  this  rule  does  not  extend  to  the  repre- 
sentative of  the  deceased  surety,  whose  liability  was  not  jiersonal, 
but  upon  property  mortgaged.®^  Bn(  as  (o  the  elTect  of  a  iiai(  pay- 
ment, by  a  principal,  upon  a  surety  in  New  York,  see  LiKh-tield  v. 
Littlefield/^  where  it  was  held  that  one  joint  maker  of  a  note,  even 
though  in  fact  a  surety,  does  not  lose  his  right  to  set  up  the  statute 
of  limitations  on  account  of  a  part  payment  made  by  another  joint 
maker,  who  was  in  fact  the  principal.  So,  part  payment  by  a  surety 
does  not  relieve  the  demand  against  the  princiiial,  unless  mad(>  at  the 
express  request  of  the  principal;®"  and  the  mere  fact  that  a  surety, 
when  applied  to  for  payment,  requests  the  creditor  to  seek  payment 

63  Muiclock  V.  Watuiman,  145  N.  Y.  55,  66,  61)  N.  E.  SL'O. 

04  Whitcumb  v.  Wliitiug,  2  Doug.  (552;  Burleigh  v.  Stott.  S  Barn.  &  C.  36; 
Wyatt  V.  Hodson,  8  Bing.  309;   Mainzinger  v.  Mohr,  41  Mich.  685,  3  N.  W.  183. 

*  Bank  v.  Cottou.  5:)  Wis.  31,  9  N.  W.  920:    Quimliy  v.  Putuaui.  2S  Me.  419. 

er.  Cross  v.  Allen,  141  U.  S.  528.  536.  12  Sup.  Ct.  67. 

06  Lane  v.  Doty,  4  Barb.  (N.  Y.)  530:  Smith  v.  Townsend,  9  Uich.  Law  iS.  C.) 
44. 

0  7  Cross  V.  Allen,  141  U.  S.  528.  536,  12  Sup.  Ct.  67.  See,  also,  Mhjer  y. 
Graham.  24  Ta.  St.  491;  Bank  of  Albion  v.  Burns,  46  N.  Y.  170. 

05  91  N.  Y.  203. 

6  8  Harper  v.  Fairley,  53  X.  Y.  442. 

ST.LIM.— 2 


I*;  THK    STATITK    t)K    I  IMIIA  IIONS. 

fnmi  iln-  iiiiii(i|t;il.  <l(trs  iidl  coiisi ihiif  smli  ;i  irqiirsl  (ti  ;intlioriz.ition 
to  lilt'  piiiniiial  to  iiinkt'  a  |»;iviin'iit  on  lirlialf  of  the  siiioty  ns  to 
r.  iidcr  Mil  h  a  iiavinciit  oiK-ralixr  to  (akt*  the  rase  out  of  llu-  staliilt- 
a«i  a.uMitJ>i    tlir  snniv.'" 

11.  TO  WHOM  ACKNOWLEDGMENT  MUST  BE  MADE. 

In  oidt-r  t«>  take  a  case  oiii  of  ilic  oin'ialioii  of  ilio  statut«'.  an 
a«-kiioul((l;:niciit  must  lie  made  to  llic  cicdiloi-,  oi-  liis  ajit-nt,  or  soim- 
otu'  actiii;;  in  liis  Ix-lialf.  or  at  Irast  niiisl  Ik-  intt'iuh'd  to  he  (•(•iniiinni 
i-atixl  to  liini.  or  1o  inlhiciifc  his  r(»ndntt.  Thus,  ajiait  fioM\  oilier 
obj(H'tions.  tho  fact  that  an  admission  or  atknowlcdmiicnt  of  an  in 
(h'litMhu'ss  is  madr  by  tin'  debtor  in  an  answer  interposed  by  him  in 
an  action  to  which  the  creditor  is  not  a  jiaity  would  not  sullice  to 
rebnt  the  prosiumptiou  of  iiaymeiil,  or  to  ri'vive  a  «hbl  barred  by  the 
statuie.^^ 

12.     APPLICATION  OF  PAYMENTS. 

\\'liere  one  jutsou  holds  several  distinct  chiims  ajjainst  another, 
and  the  latter  makes  a  i»ayment  to  the  former,  the  (piestion  as  to  the 
claim  on  which  the  ].aynient  is  to  be  applied  is,  of  course,  important  in 
deterniinin;^  which  (»f  them  is  ilieieby  taken  out  of  the  statute  of 
limitations.  If  the  debtor  owes  all  the  delits  in  his  individual  capacity, 
no  .serious  ditViculty  is  presented.  The  debtor,  in  making'  a  payment 
under  such  cinumstances,  has  the  ii;iiil  t(»  dt'sijjiiate  the  i»arlicular 
claim  upon  \\liicli  ihe  iiaymeiii  shall  be  a|i|ilied;  and,  if  he  does  not 
do  .so.  the  cre<litor  may  apjdy  the  |»aymeiil  as  he  sees  tit.  .\nd  if  nei- 
ther parly  makes  any  specilic  application  of  Hie  paymeni  as  anion';  the 
seviTul  claims,  then  the  (ourl.  wlieiie\er  the  mailer  coiues  before  it. 
will  make  such  applicali«ui  <»f  ilie  payment  as  e»piiiy  and  justice  recpiire. 
according  to  its  own  noti«Mi  of  the  inlrinsif  e<piily  and  justice  (»f  the 
cane.^*  If.  how  e\  cr.  the  cK-di  I  or  applies  the  pa\  iiient  to  a  debt  already 
barred,  such   appli«aiion  does  not    laUc   Ihal    di  bl    out   of   liie  slaliite. 

»•  Mttli'llcl.l  V.  Miil.ii<lil.  l»1   .N.  Y.  •-•o:;. 

"  Id  n-  K«'iHlri<k.  to?  .\.  Y.   |o|.    I  |o    1.-.  N    V.    TC'J:    St;mir..r(l.  .^|):iMiiip  \- 

n<iHU>u  Haiikiiiu  Co.  V.  siiiiiii  jisscji  1  g.  i{.  :<;.".. 

'»  Fl«'l«l  V.  Il<ill.'iinl.  c,  ("rnnch.  S;  CnMiHT  v.  FlinKlnRon.  1  Masou,  .''.L'.'i,  F<mI. 
Ca».  No.  a..'PC{;    I'.iiiik  of  Callfoniia  v.  \V.  Iih.  !»|   N.  V.  4<;7. 


WIIKN     rilK     I'KIIIOI)     HKtJINS    TO    HVS.  1  !> 

6(>  Jis  to  SMslaiii  M\  ;ii  I  ion   lor  the  Imhunf.  lint    if  ;i   cicilitoi    Ih»I(|m 

one  chiiiii  against  an  in  li\  idiial  di-liior.  ami  anmlK-r  riaini  iipiinttt 
tbc  same  drblor  jointiv  uiih  olltt-r  di-ltlois.  and  iIh'  individual  driitor 
niukcs  a  payiiK'iit  fruiu  his  uwn  funds,  and  no  a|>{irK'aiton  is  iit  (at-t 
made  liv  ('iilu'i-  party,  tlir  wri^iil  <tf  autliorily  fav(tis  iIm-  view  thai,  in 
th('>>l)s(Mic('  of  (|iialif\in^  cIk  iinistamcs.  tlie  |ia\nH-ni  slioidd  lli-Ml  be 
applied  by  (he  cunii  upon  (Ik-  deliloi's  individual  ol»li;,'ai  ion.' * 

13.     WHEN  THE  PERIOD  BEGINS  TO   RUN. 

Tnasniucli  as  llu'  stahile  of  liinilali<uis  Ikim's  iis  bar  upon  the  exisl 
once  of  a  jteiiod  of  time  duiin;/  wliitli  a  plaintilV  has  faih-d  to  piose- 
cute  his  cause  of  action,  it  follows  thai  the  jteiiod  of  liuiilalion  does 
not  be<iin  to  run  until  a  cause  of  action  arises,  and  also  thai  il  does 
be^iin  to  run  as  soon  as  a  cause  of  a<li(»n  arises.  Thus,  for  e.xainple. 
if  a  lej^aey  is  left  by  will  to  one  per.<on  for  life,  and  then  to  another 
absobitely,  the  hitter's  cause  of  action  to  recover  the*  je«;acy  does  not 
arise  until  the  death  of  the  peison  first  entitled  thereto;  and  (here 
upon,  and  not  until  then,  the  peiiod  of  limiiation  l>e;^ins  to  tun  a;^ainst 
bis  action  to  recover  the  ley,acy.''' 

This  principle  is  also  illustrated  in  the  case  wheic  lands  are  atleited 
by  an  assessment  aj)])earin}j  to  bo  valid  on  its  face,  and  an  apparent 
lien  upcui  the  lands,  but  in  fad  illegal  and  void,  by  reason  of  farts 
(  utsi<b'  of  the  record.  In  sinb  a  case  the  ovvnei-.  who  has  involuntarily 
)  aid  the  assessment  in  i.unoraiM-e  of  the  facts,  could,  in  luie  action. 
.<cek  to  set  aside  the  assessment,  aixl  also  to  recover  back  the  uhuhv 
jiaid  upon  it,  and  tboreforo  bis  cause  of  a<ti«ui  accrues  immediately 
upon  payment;  while,  if  the  circumstances  had  been  such  that  ho 
must  first  have  the  assessment  set  aside  before  he  <  ould  brinj:  an  action 
to  recover  back  the  payment,  then  his  i  ause  of  action  u|i«ui  the  latter 
^louiid  wcmld  not  a<<iue  until   the  assrs>meiit    had  been  s«-t   aside. '^ 

-■■i  Hliike  v.  Sawyer,  s:;  .Me.   llitl.  I'l  All.  .s;'.4. 

74  Camp  V.  iSmith.  l.'.O  N.  Y.  IST-liOl.  :\2  N.  K.  tWO:  R-ikor  v.  Stackpoole.  9 
Cow.  (N.  Y.)  420;  Livermore  v.  riaridKi".  'X\  Mr.  4L'S:  .ToIimhoii  v.  K<Mnn>"*« 
Adni'rs.  2  Har.  (Dol.)  172;    .MuiiRpr.  raym.  p.  IT.".. 

75  Gilbert  v.  Taylor,  14S  N.  Y.  2!tS.  :{or..  42  N.  K.  Ti:::  .M;iisnn  v.  A>>t»..y.  141 
N.  Y.  17!>.  IS;^,  3G  N.  E.  11:    (Jilmore  v.  Ham.  142  N.  Y.  1.  .-.«;  N.  K.  82»;. 

7fi  Tiiinnicr  v.  City  of  Ho.litster.  i;{4  N.  Y.  7(;.  ;:i  N.  K.  2'k}.  Compare 
NYeaver  v.  Havilaud,  142  N.  Y.  r.:U,  37  N.   K.  'Wl. 


'JO  THK    STATUTK    OF    MM  HATIONS. 

Tills  primipli'  is  ontlpodicd  in  s(;ilii(oiv  f«niii  in  ilir  N'lu  V«tik  Todo  of 
Civil  Prorodtire  (section  41")).  So,  in  ;in  action  in  Illinois,  for  work 
(lone  nndor  nn  oxprossod  rontmrt,  A\lii(h  was  not  fnlly  iicrfonncd,  in 
which  «'ach  |»art.v  accnsod  Ihc  tdhcr  of  oansinfj:  Ihc  work  to  he  stojijicd, 
ai>d  most  of  \ho  work  had  boon  done  more  than  livo  yoars  dhat  lu'ing 
tho  local  period  of  limitation)  hcforo  an  action  was  Ix'^un,  it  was 
In'ld  erroncons  to  charge  that,  oven  if  plaint ifl'  was  entitled  to  recover, 
undrr  an  implied  contract,  for  the  work  done,  he  conld  only  recover 
for  that  part  of  tlic  work  done  wiiliin  live  years  of  the  commencement 
of  the  action:  since,  as  the  work  was  an  entirety,  the  statntc*  of  limita- 
tion did  not  be<;;in  to  run  against  any  of  it  nntil  plaint  ill'  ceased  work- 
ing." 

H7//>r<'  Demand  is  ]\WcM/tari/. 

Nunierons  instances  are  <'lsewhere  refeired  to.  where  a  demand  is 
nr'cessary  in  order  to  set  the  statute  of  limitations  running.  These 
rest  upon  the  proposition  that  where,  by  the  exjtr^'ss  or  implied  agree- 
ment of  the  jiarties.  money  is  only  to  come  due  when  payment  is 
sought  by  the  party  entitled  thei-eto.  there  is  no  reason  why  the  peison 
<»ltliged  to  pay  should  be  able  ultimately  to  refuse  payment  mei-ely  be- 
cause the  other  i)arty  had  exercised  his  right  not  to  call  for  it.  In  a 
jiroper  sense,  there  is  in  such  a  case  no  cause  of  action  in  e.xistence 
until  the  contemplated  recpiest  has  been  made  and  refused.^*'  In- 
stances of  such  cases  are  found  in  dei)Osits.  as  distinguished  from 
loans,  while  notes  j»;iyable  on  demand,  on  grounds  already  stated, 
constitute  an  a]iparent  exception.  So,  where  one  receives  numi'y 
for  the  use  of  another,  under  such  circumstances  that  it  is  the  duty 
of  the  formei-  to  pay  it  over,  an  action  for  money  had  ami  reielM-d 
m.iy  Im-  brought  to  recover  it,  without  a  demand,  and  tlie  slatule  of 
limitati(»ns  iM-gins  to  run  fiom  the  date  of  the  receipt  of  ilie  money."'* 
Thus,  if  one  jM-rson  re<-eives  from  an  insurance  coniiiaiiy  moneys  that 
belong  to  anotlu-r.  it  is  the  ordinary  case  of  ihe  i<ciipt  of  money 
by  one  to  and  for  the  use  of  anitther,  in  which  the  duty  rests  upon 
the  party  receiving  the  m<»ney,  from   the  moment   of   its  receipt,   to 

TM/Ilrli-n  V,  Si'Xtnii.  MO  III.  .-,17.  .'U)  .\.  i:.  Hil;  KniKlit  v.  Kiil^'ht  (Ind.  Apj).) 
•Ti  N.  K.  421;  Franknvlz  v.  SiuKli.  :M  .Minn.  |n.l.  'JC,  N.  W.  U'j,-,;  Hull  v.  Wuud, 
U  (irny  i.Miimb.j  iV);    WnlUcr  v.  (;o«>«lrl(h.  1C,  HI.  ;!M. 

'•  I'nttiTBon  V.  Hlniiclinnl.  OS  <;n.  IMS.  S.',  S.  E.  .'>72. 

t»  21111a  V.  MHIh.  115  N.  Y.  W.  IM  .\.  i:.  71 1. 


WIIKN    TIIK    rKKIDI)    »K<il.\H    T(;    III   N.  21 

piiv  il  over  (o  llic  pjnty  for  wliux-  hhc  it  was  r<'«'civp(l ;  nrnl  if  tlu* 
ju'i'son  r('(('i\  iii^  It  Ims  no  licii  njxiM  i(,  im>  i-JKht  to  rctniii  it,  nor  any 
trust  dul.v  to  (Iis(liiii«j('  in  i<'s|»(m(  Io  it,  lie  iH  lia!)l«'  in  an  lu-tion  to 
rcHovcr  I  lie  same,  and  willioiit  aii.v  dcniaiMl  l)cf(tr<'  siiil."*  So.  an 
obligation  liiiuliii;;  one  to  pay  a  Hprcilied  Kuin,  but  Hpocifyinj;  no  linio 
for  payment,  is  due  at  once,  and  the  stalute  of  limitationB  begiuH  lo 
run  ininiedialcly."^  Further  illusti-ations  of  the  application  of  the 
foregoing  principles  are  given  below: 

(a)  Afjainxt  a  JJijxislt. 

The  time  fixed  by  statute  begins  to  run.  against  the  riglit  of  a 
dejiosilor  with  a  bank  or  a  private  jterson  to  recover  liis  dcjtusii.  only 
from  the  time  when  payment  thereof  is  refused.  If  the  period  of  lim- 
itation, for  example,  is  six  years,  the  mere  lapse  of  six  years  from 
the  time  when  the  deposit  was  made  is  no  bur  Lo  au  atiion.*' 

(b)  Agahist  a  Certified  Check. 

A  certification  does  not  make  the  chec  k  due  without  demand.  It 
simply  binds  the  drawcH'  bank  to  have  and  hold  suflicient  funds  to 
pay  the  check  to  one  lawfully  demanding  payim-iit.  In  other  respects 
it  still  remains  a  depository  liable  lo  pay  only  upon  dcmaml.  And 
the  mere  drawing  of  a  check  is  not  a  demand.  Thus,  if  a  dejiositor 
draws  a  check,  which  is  duly  certified  by  the  drawee  bank,  and  is  sub- 
sequently paid  to  some  one  other  than  the  payee,  upon  a  forged  in- 
dorsement of  the  hitter's  name,  these  facts  constitute  no  demand. 
The  only  person  authorized  by  the  depositor  to  make  a  demand  did 
not  do  so,  and  therefore,  whenever  the  depositor  discovers  the  mis- 
take, although  more  than  six  years  subsequent  to  the  luiyment,  he 
may  repudiate  the  charge  made  against  him,  return  the  check,  and 
claim  payment  of  the  simi  really  unpaid  to  him,  or  upon  his  order." 

80  Wodd  v.  Young,  111  N.  Y.  211,  JIT,  'M  N.  E.  193. 

81  Erviu  v.  Brooks  (N.  C.)  16  S.  E.  240.  The  distinction  betwoon  these  dif- 
ferent classes  of  cases  is  discussed  :iud  illustrated  in  Dorman  v.  Gannon.  4  App. 
Div.  458,  38  N.  Y.  Supp.  G59;  Bak.r  v.  Moore,  4  App.  Div.  234.  38  N.  Y.  Supp. 
559;  Watson  v.  Wallier,  23  N.  II.  471:  Iving  v.  Mackellar.  109  X.  Y.  215.  10  N. 
E.  201. 

•  2  Thomson  v.  Bank.  Jn2  N.  Y.  1.  8;    Payne  v.  Gardiner.  29  N.  T.  146.  16S.  171. 
S3  Bank  of  British  North  America  v.  Merchants"  Nat  Bank  of  New  York.  91 
N.  Y.  100. 


■Jj  TIIK    STATITK    oK    1,1  M  ITA  IK  •NS. 

(o)  Agaiuat  a  Crrtijicat^  of  I)tjnn<if. 

In  cnsc  of  a  doposit  of  tnoncv  ovidciKcd  hy  IIh'  ordinary  rcMtifitaU*, 
\Nliirh  siiiijily  ai  know  led  ^M's  a  di'intsil.  a  drniaiid  is  necessary  Itefme 
aeiion  lii(»n;:lil.  as  in  ilie  case  dl  an  milinai  \  l»ank  (lr|M>sii  for  wliidi 
iH»  ceitili«ate  is  issned/* 

The  c(Mtilicale  j;iven  for  a  deposit  sonieiinies  closely  rcseniMes  a 
jironiissorv  iioto. — as.  foi  example,  in  Howell  \.  Adani^."'  where  ilu* 
certificate  provided  ihai.  if  the  money  remained  on  deposit  six  months, 
intei-est  wonld  be  jiaid  at  ."  pei-  cent,  jiei  annum.  Init  contained  no 
promise  to  pay  either  primijial  or  interest  :  while  in  Uaker  \.  Leland  "" 
the  certificate  was  to  the  elTect  that  the  dejiosiior  had  de]MtsiIed  a 
specified  sum,  paifuhlt  to  Jiif<  onlrr  thi't'i'  months  tiftrr  ihift\  with 
interest  at  7  per  <<'nt.  if  left  beyond  a  specified  date.  The  fornu'r 
certificate  was  held  io  lie  a  certiticate  of  deposit,  a<;ainst  which  llio 
statute  wonlil  he^'in  to  inn  only  fi(tm  demand,  while  the  latter  was 
hehl  to  lie  a  jiromissory  note.  a;iainst  which  the  statute  w<»uld  hej^in 
to  run  from  three  inoutlis  after  its  date." 

(di   A'/'"'/i.sf  P<  iiia)i<l  Xot^,t. 

V\H\\\  a  note  jiayaMe  on  demind.  and  whether  with  or  without  in- 
terest, an  action  may  Im-  maintained  a;iainst  the  maker  without  any 
demand,  because  it  is  due;  and  the  statute  of  limitations  therefore 
be;4in8  to  ruu  at  once,  even  ihoujih  no  denmnd  is  made.'*'*  The  sjime 
rule  apjtlies  where  expressions  e(iui\:dent  to  "'on  deinamr'  are  used. — ■ 
such  as  ••(Ml  r«'(piest."'  "on  lieiii};  called  on," — for  in  all  the  teiin  is  em- 
ployed to  indicate  that  the  money  is  due,  and  not  to  provide  a  condi- 
tion jirecedent   to   its  pa\menl."'      Ihit    leinis  of  similar   im|uMt    may, 

»«  <;utcJi  V.  ritsihik,  IS  N.  J.  Kq.  .■'..'.."..  ."..".U.  ijj  .Ml.  ."I'.Mi;  I'a^  uu  V.  tianlaiiT,  21> 
.N.  V.  1  >•;.  KW. 

"i«;H  .\.  Y.  .".14. 

••J>  App.  DIv.  MuK  41    N.  Y.  Siipi..  AW. 

»••  S^i'.  hIho.  Hunt  V.  IMvliic.  :{7  til.  l.'.T:  Mill,  r  v.  .Vu^^t.n.  1?.  How.  21S:  R;nik 
-.f  Orl.-nUH  V.  .Merrill,  1'  lllll  (.\.  Y.i  2V>. 

*•  WJhh'Iit  v.  Wjmikt.  IT  N.  Y.  .".IK;  In  iv  Kind's  ICslatc  '.M  Midi.  Ill,  VS), 
:,\  ,\.  ^V.  ITH;  N«'wiiiiui  V.  Kctlrllf.  l.',  j'j.k.  i.Mid-s.i  4  IS;  I'cinin  v.  C.-.iy,  14fi 
.M.'iHH.  IIS,  1.'  N.  K.  ST;  I.aniH(in  v.  I.!niii>crt,  11'  .\.  .F.  I.iiw,  IMT;  l\ln>j-st)ur.v  v. 
I'.iill<T.  4  Vt.  4.'>S;  NVeiiiiijiii  v.  iiiHiirurice  Co.,  1.'.  Wcml.  i.\.  Y.i  l.'i;T;  .\<irliiii 
V.  Klliim.  2  .MfiH.  A.  \V.  4G1. 

•»  lldu-lnml  V.  VAUwnu\i*.  24  N.  Y.  .'.(tT;  .Noitdii  v.  Dll.im,  1]  .Mies.  ^  W  .  ICl; 
.Mr  .Mnll.u  V.  KHfTrrly,  «1>  N.  Y.    I.v;,   I.VJ. 


WHK.V    Tin;    IKIUOI)    IlKfilNS    To    RUX. 


of  colli sc,  lie  so  )iii|>ln\ )'(]  :is  to  rfiiuirr  a  (liiiiiiiiil  as  ii  condition 
preeedciil  ;  ;is,  ulnn-  a  iKtt*-  was  piivalili-  1^4  iiioiiiIih  afl»*r  (U'lnarii! 
and  it  wiis  lidil  iluit  ilio  statute  (lid  i>ot  l)<-;;iii  to  nm  until  a  dmiaiMl 
was  niado.  and  tlir  tinio  niontioncd  liad  cxitiicd. '" 

'J'iic  itriiiciplf  li\  wliicli  the  statute  of  liiiiilatioiis  l»e;^inH  to  run 
upon  a  demand  iM>te.  as  lietwet  n  the  iiol(]er  and  tlie  maker,  from  ii^^ 
in('e])tion.  a])|)lies  also  in  an  action  against  a  ;^uarantor.  wIiom'  ohii 
«i:ation  is  co-extcnsiM'  uitii  that  of  the  maker;  for,  the  moment  tin- 
maker  fails  in  law  to  jHifoini  his  contract,  a  cause  of  action  accrues 
against  the  j;uaiantor  upon  which  he  <ouId  at  once  he  Kued.**  If. 
however,  the  jiuaiantor  makes  it  a  i)art  of  his  collateral  contract  of 
guaranty  that  the  maker  sliall  pay  the  note  u|ioii  d«'iiiand.  tlieii  hiH 
obligaticm  would  not  mature  until  an  actual  diuiand  of  payment  ha« 
been  made  ujion  the  maker."^ 

(e)  Against  Indor.ser  on  Demand  ]Sf>1»\ 

In  New  York  it  is  the  settled  law  that,  a  note  payalth-  on  demand, 
with  interest,  beinjr  a  <(intinuiug  security,  no  cause  of  action  arises 
aj;ainst   an   indorser   until   after  actual   demand.     The   plain    import 
of  the  indorser's  contract  is  that  the  maker  of  the  note  will  jiay  th' 
same  at  a  certain  lime  and  i»la<e  iiained.  ami.  if  it  lemains  uniwid  after 
demand  made  at  such  tinu'  and  jdace.  he  will  |iay  it   u|M»n  notice  of 
its  nonpayment.     And  until  then  the  statute  of  limitations  does  not 
begin  to  run."^     But  as,  against  the  maker,  the  note  is  due  at  its  in 
ception,  and  the  statute  begins  to  run  against  him  from  its  date,  failur 
to  nnike  demand  w  ithin  the  statutory  period  operates  as  a  bar  in  his 
favor,  and  a  demand  thereafter  will  not  serve  to  kiy  a  basis  for  an 
action  against  the  indorser,  who  is.  therefore,  dischargeil  by  the  laches 
of  the  holder  of  the  note."* 

80  Thorpo  V.  P.<n)tli.  Ilyan  &  M.  .'588;    also.  Sinkler  v.  Turnpike  Co.,  3  Pon.  & 
W.  (l*a.>  14!1:    Miles  v.  Hdiiirli.  \\  Adol.  vV-  E.  (N.  S.)  H4."i:    Koss  v.  H.niIroa(l  Co 
6  Ind.  2i>l>. 

»i  McMuUen  v.  UnlTerty.  s!»  N.  V.  4  ■'.<;. 

82  Nelson  v.  Bostwiok.  a  Hill  iN.  V.i  :\~. 

93  Tarkcr  v.  Stroud,  98  N.  Y.  .'{Tit:    .Mcrrilt  v.  Ttxld.  'i:\  N.   V.  '>;    Pardrr  v 
Fish,  m  N.  Y.  12(;.".. 

04  Shutts  V.  Fiucar.  100  N.  Y.  r.;Ut.  W  N.  E.  588. 


-  >  THK    STATl'TK    OK    MM  ITATlo.NS. 

(f  I   In  Canr  of  an  Erprttw  Trust. 

Tin*  stnluto  of  liniifations  does  not  brfjin  i<t  i  im  ;i;:;iiiisi  tin-  l»in<' 
Hriary,  in  llu'  ciiM'  of  an  cxihcss  trust,  until  ilir  IihsIim'.  willi  tin' 
kno\vIcd;;e  of  tin  lM'iicnci;iry.  has  disivdwcd  and  ii'|indial<d  tin-  trust.'"' 
Tlic  vnW  is  ditTrrcnt  in  cn.sc  of  implied  or  ronstrvntivr  trusts  forced 
ujMin  tin-  consciouci'  of  a  party  as  a  means  of  preventing  the  consuni- 
niaiion  of  a  wron;;."'  lint  in  the  case  of  admitted  trusts  the  pos- 
session of  the  tnistoo  is  not  hostile  or  adverse  to  the  claim  of  tho 
Ixmoficiary.  and  is  eoivsisti-nt  with  the  continuing;  re(ii;;niti((n  of  the 
trust  relation  until  that  relation  is  distinctly  disclaimed.  The  cases 
arisin;;  in  bankruptcy,  or  nmler  the  insohent  laws  of  a  state,  are 
numerous  to  tin-  effect  that  from  the  time  of  the  institution  of  the 
proceedinjjs  and  the  appointment  of  an  assijjiM'e  or  trustee  in  bank- 
ruptcy or  insolvency,  the  runninj;  of  the  statute  is  suspended  as  to 
claims  not  then  barred,  and  tliat  tlie  assijjnee  or  trustee  cannot  re- 
sist payment  be<-anse  more  than  the  statutory  period  for  ])rinj;in;,f  an 
action  on  the  claim  has  elapsed  before  payment  was  demanded."^ 
Hie  case  of  the  appointment  of  a  receiver  for  the  final  windinjr  up 
of  the  estate  of  a  dissolved  corporation  is  plainly  within  the  rea.sou 
upon  which  the  authorities  cited  pnu-eed.'-'*  There  are  many  cases  of 
trust,  within  the  comprehensive  meaninj;  of  that  term,  where  there  are 
concurrent  remtnlies  at  law  and  in  eipiity.  In  such  cases  the  general 
rule  is  that,  if  the  le;,Ml  remedy  is  barred,  the  ecpiitable  renu'dy  is 
barrerl  also.""  iJut  in  the  case  of  an  e.xecntor  or  administraloi',  al- 
thou;:h  in  a  sens**  he  is  a  trustee  for  creditors  and  persons  interested 
in  the  estate  of  the  decedent  as  le;;atees  or  next  of  Uin.  in-  may  never- 
tlieless  interpose  the  statute  of  limitations  as  a  defense  t(j  an  action 
to  recovi'r  a  debt  not  barred  at  the  <ieath  of  the  te<i.iior.     This  rij^lit, 

•  »(;ihlM»rii  V.  InHuriUK-e  Co..  UlI  U.  S.  .Il.'(i,  ;',.'{7.  li:  >u\<.  \  i.  J77;  .Miles  v. 
Tborn*'.  \'>>  (al.  ;Uio;  Ih-uPHt  v,  riijol,  4 J  Cal.  ITIO;  CJranl  v.  Hurr.  ;">»  Cal.  208; 
Hf-nry  v.  .MInlnjc  Co.,  1  NVv.  CUM  n.-i.on  v.  Klv.s.  KM!  r.  s.  'Ut.  1  .Sup.  Ct.  3; 
Ki->inmir  v.  Kn-er,  8  Wall.  SJOli;  I.aiiiiiiiT  v.  Stodtinnl.  1o:5  N.  Y.  (172.  D  N.  E. 
.'{1»;  Zoblcy  v.  Trunt  Co..  YM  N.  Y.  •ic.l.  .'A  .\.  V..  1(m;7:  Van  C.iinii  v.  .Srarle, 
117  N.  Y.  I.VJ.  nil.  41  N.  K.  4'J7. 

»•  IJiMiiiier  V.  .Sl(MMaril.  la'J  N.  Y.  «i7i:.  0  N.  K.  Wis,    n,  re  I,.iiii;iii.  W.!  .M<1.  SlTt. 

"  Kx  parti'  HoKH.  U  (;!yn  &  J.  40.  XV);  .Mliiot  v.  TIimcIi.t.  7  Mete.  (Ma.ns.)  .•{48; 
rnrk«T  V.  SantMjrn.  7  (;ray    (.Mawj.)  IJil ;    Voii  Saclw  v.  Krctz,  '2  N.  Y.  54S,  556. 

»•  Klrkpntrlck  v.  McKlroy,  41  N.  J,  l-^j.  555.  7  AU.  W7. 

••Kant'  V.  IJ1oo<Iko«hJ,  7  JubUH.  Ch.  (N.  Y.)  00. 


WIIKN    THK    Pl.llIf)D    nK.niNS    TO    IlUS.  26 

siilijcci  l(»  (riliiin  (iiinlirKjiliuiis.  is  ^rinT;illy  n-rofjiiizod  by  BtatiM*-. 
it  beinj;  llu-  polirv  <»f  tlu'  hiu  l<»  rrj^nliilr  (Ih*  M«*(tI<MiM'nt  of  (*«tat«'H 
of  docodcnis  so  tluit  cliiinis  slmiild  \)v  prrK('nt««I  nnil  .'i(ljusl«*(l  wiilioiit 
uiireasoniililc  dcla.v.  'riicic  is  lilllr  anal(»;;y  bflwrcn  a  jxtkoii  Mlaiid 
ill*;  in  such  a  relation  and  I  lie  position  <»f  a  n^'civcr  of  tin*  c«lat«' 
of  a  dissolved  coiporalion.  iiiijiointed  as  llie  olTicer  ami  aj^ent  of  the 
court  to  <;et  its  assets,  and  disiiilmte  tliein  anion^,'  its  tlu-n  oxistin^ 
creditors;    and  as  against  the  latter  he  caunot  plead  the  Hlalule.*"" 

(g)  In  Case  of  JFravd  or  MlKfake. 

The  fact  that  an  action  is  liased  njion  a  fnind  of  the  <lefendaiii 
operates  in  eciuity  to  remove  the  i»ar  of  the  statute  to  the  extent  of 
sustaining  the  action  if  brouj,dit  within  the  statutory  period,  reckoned 
from  the  discovery  of  the  fraud.* °^  In  New  York  this  principb*  is 
embodied  in  a  statute  declaring  that  in  an  action  to  proi  are  a  jud- 
mont  other  than  for  a  sum  of  money  on  the  ground  of  fraud,  in  a  ca^' 
wliich  would  formerly  have  been  cognizable  in  chancery,  the  cauh<- 
of  action  is  not  deemed  to  have  accrued  until  tin*  discovery  by  th- 
phiintitr,  or  the  person  under  whom  he  claims,  of  the  facts  c<insii 
tuting  the  fraud.*"-  Under  the  princiide  embodied  in  this  slatut-  . 
the  rule  is  that,  where  the  circumstances  are  such  as  to  suggest  to  a 
person  of  ordinary  intelligence  the  probability  that  he  has  been  de 
frauded.  a  duty  of  inquiry  arises;  and  if  he  omits  that  impiiry  when 
it  would  have  developed  the  truth,  and  shuts  his  eyes  to  the  facts  which 
call  for  investigation,  knowledge  of  the  fraud  will  be  imputed  to  him 
and  he  will  be  held,  for  the  purposes  of  the  statute  of  limitaticms.  t-. 
have  actually  known  what  he  might  have  known  and  ought  to  hav. 
known.^"' 

The  decisions  of  courts  of  etpiity  formerly  placed  mistake,  as  a 

100  Ludiugtou  V.  Tbompsou,  153  N.  Y.  4l»l».  47  N.  E.  9o;'..  I'or  an  cxpl.T 
of  the  preseut  English  statute  of  limitations,  as  apphed  to  trustees,  sec  IJl 
Duties  and  Liabilities  of  Trustees,  p.  153  et  setj.:  Thorne  v.  Heard  (18041  1 
Cb.  r.lt'J;  III  re  Gurmy  [1S;>3]  1  Ch.  590;  In  re  Bowdcn.  4.'  Ch.  Dlv.  444:  Swai; 
V.  liiiugeiuan  [IS'JIJ  3  Ch.  233;  In  re  Tage.  Jones  v.  Morgan  [IMVJl  1  Cli.  ;UH 
Somerset  v.  Earl  rouK-tt  [ISDIJ  1  Ch.  irU;  How  v.  Karl  Wintorton  1180G]  2  Cb 
62G. 

101  Kane  v.  Bloodgood,  7  .lobiis.  Cb.  (N.  Y.)  0<.).  122:    Hickam  v.  Ulckam,  4' 
Mo.  App.  40C;    Lincoln  v.  Judd,  4lt  N.  .1.  E.i.  :;.S7.  21  Atl.  318. 

102  Code  Civ.  Proc.  §  3S2.  subd.  5;  Carr  v.  Tlmmpson,  S7  N.  Y.  100. 

103  Higgins  v.  Crouse,  14,7  N.  Y.  411.  42  N.  E.  G. 


•JCi  TIIK    STATUTK    OF    LIMITATIONS. 

;:i<tun(l  for  it-licf.  iiiioti  llif  sMiiir  fooling,  in  irsiM-it  to  tin-  sImIiiIc  <tf 
limitjnion.  with  fr:uid.  Hut  llu-  New  V(»rk  statute  jiliove  cited 
applies  tho  piiticiplo  to  Iho  case  of  fiaiid  only,  and  tliiis  excludes 
mistake,  so  that  tho  time  ]te«,Mns  to  inn  fi(»ni  tlie  time  when  the  mis- 
take occni  red.  ami  not  fi'om  the  time  of  its  discovery.'"* 

The  quest  ion  wlieiher  courts  of  law  can  iccofjuize  tho  existence  of 
fraud,  as  the  ha.sis  of  an  a»-ti«»u.  and  as  removini:  the  bar  of  the  statute 
in  favor  of  an  action  brought  within  tlie  presciilied  i»eriod  after 
discovery  thereof,  has  received  dilTereiit  answers.  In  some  courts  it 
has  been  held  that  fraud  has  this  effect,' "'^  while  in  others  the  con- 
trary doctrine  has  been  ad<)pted.'"«  The  New  York  statute  contains 
no  provision  recognizinj;,  in  respect  to  actions  at  law,  the  principle  ap- 
plied in  eciuity.'"^ 
(hi  ///  A'tinn  to  S>'t  Aside  Frauduhnt  Convryance. 

The  last  precedino;  subdivision  relates  to  cases  where  the  right 
of  action  arose  as  soon  as  the  fraud  was  committed,  but  where  the 
person  who  had  that  riji;ht  did  not  know  of  the  fraud,  and  so  did  not 
know  of  his  rij^ht  to  sue  until  subsecpiently.  A  dilferent  case  is  pre- 
sented where  a  debtor  makes  a  cimveyam-e  of  his  property  which  is 
fraudulent  as  to  creditors.  Here  a  creditor,  even  though  he  knows 
of  the  fraud,  has  no  ri^dit  to  maintain  an  action  to  set  the  conveyance 
aside  until  la-  has  tirst  recovered  judj^'meut  a«,'ainst  the  debtor  upon 
the  indebtedness,  and  execution  thereon  has  been  returned  unsatisfied. 
rntil  then,  theiefnre,  the  statute  of  limitations  docs  not  begin  to 
run.*"* 

io<  Kxkorn  v.  E.xkorn.  1  App.  Dlv.  VIA.  'M  N.  Y.  Siipp.  68;  Onkcs  v.  Howoll. 
L'T  How.  I'rac.  151;  Uo.vt  v.  rutuatu.  ;\\)  Iliiii.  401.',  40i;;  Mnsou  v.  lltiir.v.  ITiL' 
N.  V.  :>-J\K  lU  N.  K.  8;{7.  Coiiipart'  De  Fon-st  v.  Walters.  irsJ  N.  Y.  L**-M>.  47 
N.  K.  21H. 

i«>-.  Kirsl  Massjiilmsctls  Tunipil<f  ('(irp.  v.  I'icld.  :;  .M;iss.  •jnl;  Mailock  v. 
T«.il(l.  li.'.  1 11(1.  IliS. 

'"« 'I'mnji  V.  Siiiitli's  H.x'r.s.  20  .Idliiis.  (N.  Y.j  .'UI;  Mel. me  v.  Ashliy,  7  Hidi. 
Kq.  (S.  r.i  4.".<t. 

107  Sec  Ilickain  v.  lll<kaiii.  4C,  Mn,  Aim'  4!h;:  I'nclmldf  is  of  Somerset  v. 
Vi-KhlJ'.  44  N.  J.  IJiw.  TAW).  .'.11. 

ion  Wonvor  v.  Havllaiul,  14*J  N.  Y.  W.'A.  .''.7  N.  I-.  (rll.  (diiipare  'rriiiuiier  v. 
City  of  H'KhesKT.  i:'.l   N.  Y.  7C,,  :n    N.  K.  L'.-,.',. 


WIIKN    TIIK    IKKIiiK    HKGIN8    TO    KUN.  27 

(i)    ///  Acfianx  iujiii n^t  nil  Attomn/. 

Hy  I  he  ((iiiiiiKiii  law  :iii  allfiincy  a(  law  was  in»l  miIijimI  to  uri  action 
for  inoiu'ys  of  his  clicnl,  i-olltM  ltd  in  hiw  |»iof<'ssioiial  (-apacity,  until 
aftor  d<'nian(l  and  refusal  to  pay.  except  in  ras(?H  where  he  had  aji 
l)li<'d  the  nione}'  to  his  own  us«'.  or  otherwise  wron^^fully  dealt  with 
it.'""  ^^'heIl  he  lias  aded  in  <hhh\  failli.  he  shouhl  he  pioiccti-d  frcnn 
tlie  costs  of  a  suit  until.  uj)on  deuiaiuJ,  he  ne;,dects  or  refuses  to  pay. 
But,  if  the  client  has  knowledj;e  of  the  receipt  of  tlw  money  by  the 
attornej',  then  the  statute  of  limitations  will  lie;:in  lo  inn  from  the  lime 
when  the  client  had  such  knowledj^o,  because  upon  that  his  ri«ihi  to 
make  the  demand  may  be  said  in  such  cases  to  dejiend.*^"  IJut  the 
client's  right  of  action  against  an  attorney  for  neglig«*nce — as.  for 
example,  in  the  examination  of  a  title — accrues  at  the  time  the  fxain- 
ination  is  made  and  reported,  and  not  when  damages  result  theie- 
from.^i^ 

(j)   Cloud  oil  Title. 

Where  an  action  is  brought  by  one  alicaily  in  possession  of  land 
to  compel  the  removal  of  an  instrument  which  a[)parently  impairs  and 
injuriously  affects  the  i)laintiffs  title,  the  statute  of  limitations  is 
not  available  as  a  defense.  An  owner  has  a  right  to  invoke  the  aid 
of  a  court  of  equity,  at  any  time  while  he  is  the  ownei'.  i<»  liavc  an 
apparent,  though  in  fact  not  a  real,  incumbrance  discharged  from  ihe 
record.  It  is  a  continuing  right,  which  exists  as  long  as  the  occasion 
for  its  exercise."^  Puch  a  cloud  upon  title  results  sometimes  fii»m 
fraud  and  sometimes  from  mistake.  In  either  case  the  mere  exist- 
ence of  a  cloud  does  not  set  the  statute  of  limitations  running  on  ac- 
count of  the  continuing  nature  of  the  ground  of  action;  anrl  even 
if  the  mistake  is  made  the  basis  of  an  actual  advcis.-  claim,  the  stat- 

109  Taylor  v.  Bates,  5  Cow.  (N.  Y.)  ;!7G.  Sch'  W(h)(1  v.  Yomi^'.  141  N.  V.  Jll. 
218,  36  N.  E.  19:1 

110  Wood  V.  Young.  141  N.  Y.  211.  218.  .".<)  N.  E.  1".«;  Bronson  v.  .Miins^in.  29 
Hun  (N.  Y.)  54. 

111  Schade  v.  Gebuer  (Mo.  Sup.;  34  S.  W.  570;  Moore  v.  Juvenal.  I»2  I'a.  St. 
484;  Lilly  v.  Boyd,  72  Ga.  83.  As  to  the  running  of  the  statute  In  actions  by 
an  attorney  to  recover  for  services,  see  Enuis  v.  Car  Co..  HV»  III.  Hil.  4G  N.  E. 
439;  Adams  v.  Bank,  30  N.  Y.  25o;   Hale's  Exrs  v.  Ard's  Ex'rs.  4S  I»a.  St.  22. 

112  Smith  V.  Reid,  134  N.  Y.  508.  577,  31  N.  E.  1082;  Miner  v.  B<M-kman.  .'.0 
N.  Y.  337,  343;  Schoener  v.  Lissauer,  107  X.  Y.  Ill,  13  N.  E.  741;  De  Forest 
V.  Walters,  153  N.  Y.  229,  241,  47  N.  E.  294. 


•J8  THE    8TATUTK    OK    I.IM  I'i'ATIONS. 

utc,  if  it  runs  at  all.  docs  not,  in  any  event,  beuin  to  run  until  tlio 
parly  against  whom  it  is  invoked  is  charjj;etl  with  knowle(lj,'e  of  an 
as.<iMtion  of  some  adverse  claim.  Such  a  case  exists,  for  example, 
where  an  ambiixnous  expression  in  the  deed  constitutes  the  basis  of 
an  adverse  claim,  and  the  mistake  is  not  apparent  on  the  face  of  the 
deed."' 

Kelief  ajjainst  a  cloud  on  a  title  may  also  be  sought  by  a  defendant 
in  an  action  in  which  the  plaintill'  attempts  to  assert  title  through  a 
deed  alleged  by  the  defendant  to  be  inoperative  by  reason  of  the  mis- 
take in  description.  The  plaintiff's  action  of  ejectment  in  such  a  case, 
where  equitable  relief  may  be  demanded  by  the  defendant,  furnishes 
the  occasion  for  the  interposition  of  such  a  claim  by  the  defendant; 
and  if,  in  such  a  case,  there  is  nothing  in  the  record  to  show  when  the 
plaintiff  first  asserted  a  claim  under  the  deed  to  the  knowledge  of  the 
defendant,  or  when  the  latter  first  learned  of  the  mistake,  or  of  the 
plaintiff's  claipi.  no  basis  is  furnished  for  the  applicatioo  of  the  statute 
of  limitations."* 

(k)  In  Case  of  a  For ei (J n  Corpomfion. 

Inasmuch  as  it  is  a  general  object  of  the  statute  of  limitations  to 
save  the  remedy  of  the  creditor  in  all  cases  where  he  has  been  prevented 
from  prosecuting  the  debtor  in  the  local  court  in  consequence  of  the 
absence  of  the  latter  from  the  state,  this  principle  applies  to  a  for- 
eign corporation,  so  that  as  it  is  legally  coutined  to  the  territory 
of  another  state,  and  cannot  possibly  return  to  that  of  the  forum, 
an  action  against  it  in  the  latter  state  may,  under  statutes  such  as 
that  of  New  York,  be  commenced  at  any  time,  for  the  period  of  lim- 
itation will  never  commence  to  run.  The  policy  of  the  law  is  that 
no  pel  sons,  natural  or  artilicial,  who  are  so  circumstanced  that  they 
cannot  come  within  the  local  jurisdiction,  can  impute  laches  to  their 
creditors,  or  tho.se  claiming  to  have  rights  of  action  against  them,  in 
not  pursuing  them  in  the  foreign  jurisdiction  where  they  reside."' 
This  rule  obtains,  although  the  foreign  corporation  has,  before  the 

"»  Df  Forest  V.  Walters.  153  N.  Y.  'I'^S),  '241.  47  N.  E.  294;  Smith  v.  Reld, 
W'A  N.  Y.  u(;s.  nTH.  .'U  N.  E.  H>8iJ. 

>M  l>e  Fon-Ht  V.  Waltcr.s.  l.-.;i  N.  Y.  '1'1\\  '1\\.  17  N.  Iv  2!)1:  li.irtl.'tt  v.  .Imld, 
•1\  N.  Y.  2rX>;   SprnKUc  v.  Ctx-liran,  144  N.  Y.  lOl.  :W  N.  K.  KHMJ. 

n6(Hrott  V.  Itallroad  Co.,  20  N.  Y.  210.  See,  also,  Clark  v.  Hailroad  Co.,  94 
N.  Y.  217. 


MUTUAL,   OPKN,   AND    CUItKKNT    ACCOUNTS.  29 

commencemont  of  tlio  ad  ion,  for  (he  time  s|i<Miii<'(l  in  llif  statute, 
continuously  oi)era({Ml  and  carried  on  its  busiinss  in  IIiIh  Ktate,  and 
had  property  and  ofllcers  therein.*^' 

14.     ADVERSE  POSSESSION. 

If,  in  litigation  respecting  tlie  title  to  real  estate,  it  aj)poarR  that 
the  defendant  has  maintained  what  the  law  deems  a  perfect  posses- 
sion, "if  continued  without  inlerrujition  during  a  wliole  period  which 
is  prescribed  by  the  statute  for  the  enforcement  of  the  right  of  entry, 
such  possession  is  evidence  of  a  fee.  Independent  of  ]»ositiv«'  or  statute 
law,  the  possession  supposes  an  acquiescence  in  all  persons  claiming 
an  adverse  interest,  and  upon  this  acquiescence  is  founded  the  pre- 
sumption of  the  existence  of  some  substantial  reason  (though,  per- 
haps, not  known)  for  which  the  claim  of  an  adverse  interest  was  for- 
borne. Not  only  every  legal  presumption,  but  every  consideration  of 
public  policy,  requires  that  this  evidence  of  right  should  be  taken  to 
be  of  very  strong,  if  not  of  conclusive,  force."  "^  The  possession  which 
will  thus  bar  the  right  of  the  former  owner  to  recover  property  must 
be  an  open,  visible,  continuous,  and  exclusive  possession,  with  a  claim 
of  ownership,  such  as  will  notify  parties  seeking  information  upon 
the  subject  that  the  premises  are  not  held  in  subordination  to  any 
title  or  claim  of  others,  but  adversely  to  all  titles  and  all  claims.'** 
This  subject  is  usually  regulated  by  statutes  of  limitation,  which  fre- 
quently enumerate  the  particular  facts  which  must  be  shown  in  order 
to  establish  a  title  by  adverse  possession.' '" 

15.     MUTUAL,  OPEN,  AND  CURRENT  ACCOUNTS. 

The  statute  of  21  Jac.  I.  c.  16,  expressly  excepted  from  its  oi)eration 
"such  accounts  as  concern  the  trade  of  merchandise  between  mer- 
chant and  merchant,  their  factors  or  servants."  It  was  held  that 
the  exception  in  that  statute  applied  only  to  the  action  of  account,  or 

116  Boaidman  v.  Railroad  Co.,  84  N.  Y.  157,  ISo. 

117  Angel  on  Limitations,  quoted  in  Sharon  v.  Tucker,  144  U.  S.  r)4  J.  12  .Sup. 
Ct.  720. 

118  Sharon  v.  Tucker,  144  U.  S.  533,  12  Sup.  Ct.  720. 

iif>  Code  Civ.  Proc.  N.  Y.  §  365  et  seq.;  Miller  v.  Railroad  Co.,  71  N.  Y.  380; 
Hull  V.  I'owel,  4  Serg.  cV:  H.  U'a.)  405. 


30  THK    STATl'Tl':    OV    I. IMITATIONS. 

to  nil  ncfion  on  Jho  ciisc  lor  iiol  afcdunlinu.  and.  alter  ronsiilcrahlc 
varillalidii  in  the  dctisions,  thai  acccMints  wiiliin  llic  exception  were 
noi  Itaricd.  even  if  there  were  no  items  on  the  otiiei'  sich'  of  the  ac- 
«uunt,  williiii  six  years.*-"  It  was  also  hehl  that  the  exce|(tion  in 
the  statute  extended  only  to  accounts  concernin<i:  the  trade  of  mer- 
chandise between  merchant  and  merchant,  and  not  to  other  a<-counts. 
Other  aii'ounts  were  held  to  be  within  the  statute,  and  the  cause  of 
action  upon  them  was  held  to  accrue  from  the  last  item  of  credit  there- 
in.'-"^ It  was  only  mutual,  open,  and  current  accounts  that  could  come 
within  the  exception  of  the  statute  as  to  merchants'  accounts;  and  in 
the  case  of  accounts  not  concerning  the  trade  of  merchandise,  to  escape 
the  bar  of  the  statute,  there  must  have  been  new  accounts  ami  items 
of  credit  within  six  years. *-^ 

This  statute,  with  slight  verbal  alterations,  having  become  the  law 
of  New  York,  the  exception  as  to  merchants'  accounts  continued  until 
the  adoption  of  the  Revised  Statutes,  and  it  was  early  held  that  the 
law  enacted  in  that  state  should  receive  the  same  construction  as  the 
statute  of  Jac.  I.  had  received  in  England.^ -^  F.ut  there  had  been 
some  confusion  and  uncertainty  in  the  various  decisions,  and  there 
was  some  departure  from  the  law  as  stated  in  England.'-*  The 
piovisions  of  the  Revised  Statutes,  and  the  subsequent  provisions  of 
the  Cod«*,  produced  no  change  in  the  law  as  previously  settled  in  New 
■S'ork,  in  resjtect  to  accounts,  which  has  just  been  stated.  "(1)  The  ex- 
ception relating  to  mutual,  open,  and  cun-ent  accounts  extends  to  all 
pi-rsons,  whether  merchants  or  others;  (2)  where  all  the  accounts 
have  ceased  for  six  years,  the  demand  is  l»ari-ed,  and,  consequently,  that, 
wheie  there  is  an  ojkmi,  mutual  account  within  six  years,  the  whole 
account  may  be  ri'covered;  (;»)  that  the  limitation  of  the  statute  a[»- 
plies  as  well  to  accounts  between  merchants  as  others.'' '-'• 

Where  goods  are  delivered  by  a  debtor  to  his  creditoi'  as  an  account 

>2o  Hol.iiisoij  V.  Al.x.iiKl.r,  s  l',li;;b  (N.  Sj  lio2;  iw^Ua  v.  llaigli,  S  Mecs.  A:  W. 
TTo. 

'->  CatliiiK  V.  Siioiijdiii;.'.  r>  'f.-iiii   U.  IK!). 

121-  (Jn-fii  V.  Di.slinnv.  7!t  .\.  V.  1.  C;    Day  v.  Mayo.  l.".l  .Mass.  472,  IW  N.  E.  >S!»S. 

»23  UjinicliiiiKlcr  V.  Haiiiiiiiiri(i.  2  .Inlms.  (.\.  V.i  ijiMt. 

>2<  (irccu  V.  Dl.sl»iu\v,  T!»  .\.  V.  1.  <!. 

12.-.  (;reon  v.  DIstjrow,  70  .\.  V.  1.  <;.  Also  I'.alcs  v.  S.il)iii.  <;t  Vt.  ."11,  21  At). 
101.'!.  1014;  Miller  v.  Ciunuuioii,  J<;S  111.  117,  4J>  N.  E.  45;  c;uli<k  v.  'iiiriipiki,' 
Co.,  14  N.  J.  Law,  54o. 


MUTUAL,  OPEN,   AM)    fUUKKNT    ACCOUNTS.  31 

ajiJiiiisl  liiiii,  i(  will  not  he  prcsuiiicd  that  (hey  wcic  (li-JiMud  in  pay 
meat.  Before  they  can  be  held  to  have  been  ho  dt  li\i-n(i.  linn-  nm.-i 
be  proof  that  it  was  so  intended,  and  that  both  parlies  so  iiii(1ii>)immI 
it.  An  account  of  items  upon  one  side  and  payments  ujion  iIk*  other 
is  not  a  mutual  account.  The  payments  do  not,  in  smli  case,  enter 
into  the  account.  They  aic  at  once  a|)i)lied.  and  icdiicc  i li<-  acmunl .'  -" 
^^'llere  there  are  mutual  accounts  between  two  peis(uis.  it  is  always 
the  understanding-  that  the  accounts  upon  one  side  shall  olVset  that 
upon  the  other,  and  in  law  the  debt  due  from  one  to  the  other  is  only 
the  balance  left  after  the  application  in  reduction  of  the  ac(  <.nni  on 
the  opposite  side.  Tlie  very  theory  on  which  the  provision  of  ih.- 
statute  of  limitations  relatinj;  to  accounts  is  based  is  that  the  d.-diis 
are  mutual,  and  that  the  account  is  permitted  to  run  with  tin-  view 
of  ultimate  adjustment  by  a  settlement  and  payment  of  the  balaine.'-' 
"In  ordinary  cases  of  mutual  dealings,  no  obligation  is  created  in  re- 
gard to  each  particular  item,  but  only  for  the  balance;  and  it  is  the 
constantly  varying  balance  which  is  the  debt."  '^^  Thus,  where  a 
party,  wlio  has  items  charged  against  him  u])on  an  account,  delivers 
goods  to  the  other  party  on  the  mutual  undei standing  thai  iii<'.\  are 
to  enter  into  the  account  between  the  parlies,  to  be  adjusted  when 
the  account  should  be  settled,  the  delivery  does  not  constitute  a  pay- 
ment on  account  of  existing  items,  but  they  would  be  credited  on  the 
opposite  side  of  the  account,  so  that  in  any  future  settlement  between 
the  parties  he  could  have  the  benefit  of  them.  Tlie  legal  eU'ect  i>f 
such  a  transaction  is  that  the  party  delivering  the  goods  sells  them  to 
the  other  party,  the  price  to  be  credited  on  the  account.^ -•' 

120  (Jieen  v.  Disbrow,  79  N.  Y.  1,  9.      Compare  Warreu  v.  Swi'i'iu-y.  4  Nev. 
101. 

127  Grot'U  V.  Disbrow.  7!>  N.  Y.  1.  10. 

128  Abbott  v.  Keith,  11  Vt.  r)2."i;    Truenian  v.  Fcnton.  1  Sniitli.  Load.  Cas. 
(Hare  &  W.  Notes)  966. 

120  Green  v.  Disbrow.  79  N.  Y.  1,  10:    Clianiliors  v.  Martis.  2.".  I'a.  St.  'JiMi; 
Nortou  V.  Larco,  30  Cal.  12G. 


TflE    STATUTK    OK    I.IM  ITA  IIONS. 


16.     LIMITATIONS  AS  AGAINST  THE  GOVERNMENT. 

ApiMl  fi-om  (lie  ((jtcralion  of  stntiitts  of  limiiarKni.  iIh'  ilrfriiscs  of 
stale  claims  and  ladies  cannot  hv  set  up  aj,Minst  the  •xoverninent.*^*' 
This  (htctiine  was  enibndied  in  the  jihrase,  "Niilluin  tenipus  occnrrit 
le^'i."  This  maxim  is  fenndeil.  iwit  on  tlie  j^Monnd  of  extraordinai'y 
preroj^ative,  but  upon  a  {^leat  i)iiblic  policy.  The  {government  can 
transact  its  business  only  tliroufih  its  agents,  and  its  fiscal  operations 
are  so  various,  and  its  agencies  so  numerous  and  scattered,  that  the 
utmost  vigilance  woidd  not  save  the  public  from  the  most  serious 
loss,  if  the  doctrine  of  laches  couM  be  aj>plied  to  its  transactions.^^^ 

But  the  principle  is  conlincd  to  cases  where  the  government  has 
a  direct  pecuniary  interest  in  the  subject-matter  of  the  litigation. ^^^ 
Thus,  for  example,  if  a  suit  is  brought  in  the  name  of  the  United  States, 
to  set  aside  public  land  yiatents  issued  by  one  of  its  departments,  if 
the  government  has  in  fact  no  interest  in  the  result,  the  suit  being 
brought  for  the  interest  of  individuals,  the  statute  of  limitation,  if  a 
bar  against  the  latter,  may  be  set  uj)  against  the  United  States  as  the 
nominal  jilaintilT.'^^  But  the  fact  that  a  government  is  not  bound  by 
statutes  of  limitation,  does  not  involve  the  conclusion  that  a  citizen  is 
not  bound  by  them,  as  between  himself  and  the  government;  ^^*  and 
agents  of  the  government,  when  treated  as  principals,  may  i-ely  upon 
the  j)rotection  of  the  statute.^ ^^ 

Although  the  principles  above  stated  had  become  established  in 
connection  with  the  equitable  doctrine  of  laches  and  the  common-law 
lule  respecting  stale  claims,  irresjtective  of  tlie  operation  of  statutes  of 
limitation,  the  sjune  piinciples  apply  under  such  statutes,  but  the 
ajiplicatioii  of  the  princi|tles  is  generally  coiitidlled  by  statutes  tixing 
some  period  within  which  the  government,  allhoiigh  an  actual  party  in 
interest,  must  bring  actions,  if  at  all.     Thus,  by  Code  Civ.  I'roc.  N.  Y. 

>»o  U.  S.  V.  Dalh's  .Military  Hruul  C<i..  1  lo  1'.  S.  5tK)-rK}2.  11  Snp.  Ct.  !>S8;  U. 
S.  V.  Klrkpatrlck,  U  Wheat.  71iO. 

>a>  r,  S.  V.  Klrkpatrkk,  «  Wheat.  71i<>. 

»»2  San  rc<Im  Cnnon  del  A^iia  Co.  v.  f.  S..  14«;  i:.  S.  IL'o.  l.'5."i.  1.3  Snp.  Ct.  94; 
f.  8.  V.  I)e«  .Molnt'8  Nav.  &  Hy.  Co..  14'J  V.  S.  .")l<>-rKy).  12  Sup.  Ct.  'MS. 

i»a  Ciirtnor  v.  T'nltfd  States.  14U  C.  S.  r,i\'2.  CTli.  VA  Sup.  Ct.  !>S5. 

'»♦  Slanley  v.  S«-h\van)y.  1  17  1'.  S.  TidS.  .".17.  l.";  Snp.  Ct.  41S. 

ia»  Ware  v.  City  Co.,  Ill  C.  S.  170,  4  Siii).  Ct.  ;i.{7. 


KX<KITIt)NS    AND     IM-^  Mil  I  I  11  K-^. 

§  2i\2.  it  is  provided:  "'riuil  tlic  pcoiilr  uf  {\u-  sliiic  will  not  sih-  a  jur- 
son  Tor  <m-  wiili  icspcd  to  r<';il  |iri>|M-ily,  or  llic  iswufH  or  {u-olUfl 
tluM-cof,  b.v  iciisoii  of  tlic  rijj;lit  oi-  title  of  the  pcoph'  to  the  naiiio.  uiiUiw 
ritlu'i-  (1)  tlu'  cause  of  action  accrued  within  10  years  In-fon-  tin*  aclion 
is  conuuenced;  or  (2)  the  |>eo]ile,  or  lliosc  from  whom  ihev  chiim.  havp 
received  the  rents  and  profits  of  liu'  re;il  property,  or  of  some  part 
thereof,  within  the  same  period  of  time."  And  liy  section  ''.S!»  it  Ih 
]>rovided,  with  reference  to  actions  other  tluni  for  the  recovery  of  real 
juoperty.that  the  limitations  prescril»ed''a]>ply  alike  to  actions  lu-ounht 
in  the  name  of  the  jieople  of  the  slate,  oi'  for  their  lienelit.  and  to  ac- 
tions by  private  persons."  AimI,  even  apart  from  the  operation  of 
such  statutes,  the  maxim,  "I-ipse  of  time  is  no  bar  to  the  ri;;hts  of 
the  soverei^ni,"'  applies  only  to  a  sovereign  state,  and  not  to  nuinicipal 
corporations  deriving  their  powers  from  the  state;  and  .so  tin-  statute 
runs  against  cities,  towns,  counties,  and  school  districts,  except  as 
otherwise  provided  by  statute.^ ^* 

17.     EXCEPTIONS  AND  DISABILITIES. 

It  is  very  evident  that  theie  are  classes  of  cases  where  it  woiild  be 
most  unjust  to  allow  the  mere  lai)se  of  time  to  bar  the  enforcement 
of  a  cause  of  action.  Such,  for  example,  would  be  cases  of  infants; 
for  an  infant,  being  under  general  legal  disabilities  in  many  respects, 
ought  not,  during  his  minority,  to  have  time  counted  against  him 
under  the  statute.  But,  as  the  absolute  bar  created  by  the  lap.se  of 
a  specified  time  rests  upon  a  statutory  basis,  so  any  exceptions  to 
the  application  of  the  statutes  of  limitation  must  be  sought  in  the 
statutes,  and  accordingly  the  details  of  the  law  ui)OU  this  subject  vary 
in  different  jurisdictions. 

Statutory  Provisions  in  Neio  York. 

(a)  Thus  the  New  York  Code  of  Civil  Procedure,  after  regtilating  th<- 
subject  of  alterations  in  actions  for  the  recovery  of  real  property  (sec- 
tions 8<)2,  374),  provides  in  section  375  that  if  a  pcison  who  might 
maintain  an  action  to  recover  real  property,  or  the  possession  thereof. 

136  st.ite  v.  School  Dist.  No.  9,  30  Neb.  520,  4G  N.  W.  Ol.'i.  and  27  \m.  St. 
Rep.  420;   Pimental  v.  City  of  San  Francisco,  21  Cal.  3ol:   Clark  v.  Iowa  City. 
20  Wall.  583;   Evans  v.  Erie  Co.,  00  Pa.  St.  225;   Inhabitants  of  Kfnn.-l.nnkiM.rt 
V.  Smith.  22  Me.  445. 
ST.LIM.-3 


l\\  THK    STATUTK.    OK    I  I  M  1  lATIONS. 

or  iii;il;c  nil  onliy.  or  iiilcrijosc  llic  ilcfnisc  oi-  comilnt  l;iim  foimdtMl 
(HI  ilic  liilc  lo  rciil  jtroix-rly,  or  rciils  or  services  out  of  llic  s;ime.  is. 
u'/cn  /u'.'i  iiilt'fird  dtmcfx/s,  or  his  cause  oi  aelion  or  rijjlil  of  entry 
^rirsf  rtrr/'v/'.s,  either  (1)  within  the  age  of  21;  or  (2)  insane;  or  0?) 
iniiirisoned  on  a  criminal  char;;e,  or  in  execnlion  upon  conviction  of 
a  criminal  offense,  for  a  term  less  than  for  life. — the  lime  of  such  dis- 
ability is  not  a  part  of  the  time  limited  for  connnencin^  the  action,  or 
makin^^  the  entry,  or  interposing  the  defense  or  counterclaim,  except 
that  the  time  so  limited  cannot  be  extended  more  tiian  10  years  after 
the  disability  ceases,  or  after  the  death  of  the  person  so  disabled. 

(b)  So.  aijain,  after  regulating  the  period  of  limitation  in  actions 
other  than  for  the  recovery  of  real  property  (sections  37G,  395),  the 
Code  provides,  in  section  :VM\,  that  in  all  these  cases,  with  two  or 
tliree  specitied  exceittions,  the  time  of  disability  caused  by  infancy, 
insanity,  or  imprisonment  under  the  circumstances  above  mentioned, 
is  not  a  part  of  the  time  limited  for  commencing  the  action,  except 
that  the  time  so  limited  cannot  be  exttmded  more  than  live  years  by 
any  such  disability  except  infancy;  or,  in  any  case,  more  than  one 
year  after  the  disability  ceases. 

(c)  So,  again,  by  Code  Civ.  Proc.  §  401,  it  is  provided  that:  "If,  when 
the  cause  of  action  accrues  against  a  person,  he  is  without  the  state, 
the  action  may  be  commenced  within  the  time  limited  therefor,  after 
iiis  retiu-n  into  the  state.  If,  aftrv  a  cause  of  action  has  accrued 
against  a  jierson.  he  departs  from  the  slate,  and  remains  continmmsly 
absent  therefrom  for  the  sj)ace  of  one  year  or  more,  or  if.  without  the 
knowledge  of  the  person  entitled  to  maintain  the  action,  he  resides 
within  the  state  under  a  false  name,  the  time  of  his  absence  or  of  such 
residence  within  the  state,  under  such  false  name,  is  not  a  part  of  the 
time  limited  for  the  commencement  of  the  action."  This  section  d(»es 
not  ajiply  whih*  the  designation  of  another  resident  of  the  state  as 
a  j)erHoii  upon  whom  to  serve  suiumoiis  or  other  piocess  or  jiapers, 
executed  and  tiled  in  accordance  witli  the  pi()\isions  of  section  V.\K), 
or  subdivision  2  of  section  V-Vl,  remains  in  force.  Tlie  operation  of 
tliis  section  is  illustrated  by  the  case  of  an  action  njion  a  written  in- 
Ktiumeiit  in  the  nature  of  a  promissory  note  for  •'^l.OOO,  dated  January 
L'.'!.  ISSL',  made  by  the  defeiMlant's  testatrix  to  the  jjlaintitT,  payable 
on  or  before  one  year  after  tiie  death  of  tlie  maker,  with  interest. 
'I'lie  maivei    died   in  ,l;iiiii;iiy,    1S1M>,   ie;i\ing  a   will,   in    which   the  de- 


ExciirnoN.s  anj;  oisAi;ii,rni>.  rir» 

fendaiit,  llicn  and  cvor  siiico  a  i-csidciil  of  <  "liiciij^ij,  \\;i>  nmrM-il  nn 
execulrix.  Tlic  drfcndaiil  duly  (inalilicd.  and  iirocccdcd  to  a<lniin 
ister  the  estalo  h\  advnlising:  for  claims  iindi-r  llic  (ndcr  of  tin*  suiro 
pile  of  Otsego  county,  where  the  testatrix  ifsidcd  at  the  titnf  of 
lier  death,  and  who  had  jurisdiction  in  the  case.  In  compliance  with 
the  notice  callinj;  for  the  presentation  of  cUiinm  aj^ainst  the  estate, 
the  plaintiff's  claim  was  presented  and  was  rejected  i»n  .lanuary  25, 
1801,  and  notice  of  its  rejection  j;iven  to  the  plaintitf,  and  thereafter 
an  action  was  commenced  by  procuring  an  order  for  the  puhlicatiou 
of  the  summons,  December  14,  ]891,  and  which  was  followed  by  serv- 
ice of  the  summons  upon  the  defendant,  in  Chicago,  January  I),  1802. 
The  defendant  aj)peared,  and,  among  other  defenses,  interposed  that 
of  the  statute  of  limitations.  By  section  1822  of  the  Code,  an  action 
upon  a  disputed  claim  against  the  estate  of  a  deceased  person  must 
be  commenced  within  six  months  after  its  rejection  by  the  executor, 
unless  it  is  referred  under  th<'  statute.  But  by  section  401,  if  the 
defendant,  when  a  cause  of  action  accrues  against  him,  is  without 
the  state,  the  action  may  be  commenced  within  the  time  limited 
therefor,  after  his  return  into  the  state.  The  question  was  whether 
this  section  applied  to  the  case  in  hand,  for,  if  so,  it  was  a  complete 
answer  to  the  defense.  The  defendant's  contention  was  that  th<? 
effect  of  section  401  was  qualitied  by  secticm  414,  to  the  effect  that 
the  provisions  of  the  chapter  of  the  Code  relating  to  limitations  "ap- 
ply and  constitute  the  only  rules  of  limitation  applicable  to  a  civil 
action,  or  such  proceeding,  except  in  one  of  the  following  cases:  (1) 
A  case  where  a  different  limitation  is  specially  presciil)ed  by  law.  or  (2) 
a  shorter  limitation  is  prescribed  by  the  written  contract  of  the  par- 
ties.*' Now,  the  six-months  statute  of  limitations  found  in  section 
1822  is  "a  case  where  a  different  limitation  is  specially  prescribiKi 
by  law,"  but  it  was  held  that  section  414  was  not  intended  to  apjily 
to  cases  like  that  under  consideration,  and  that  the  general  provisions 
of  the  chapter,  including  section  401,  were  applicable.'" 

(d)  So,  by  section  402  of  the  Code,  "if  a  person  entitled  to  maintain 
an  action  dies  before  the  expiration  of  the  time  limited  for  the  com- 
mencement thereof,  and  the  cause  of  action  survives,  an  action  may 
be  commenced  by  his  representative,  after  the  expiiatiou  of  that 
time,  and  within  one  year  after  his  death.'' 

137  Haydeu  v.  Fierce,  l-i-l  N.  Y.  512,  39  N.  E.  G38. 


30  TRK    STATUTK    OK    I.IM  H  ATloNS. 

(o)  Tlio  raso  of  (lio  dcalh.  williin  llir  siiiir.  of  ;i  |hisoii  ;i^;iiiist  wlioni 
a  canso  of  action  exists,  or  tli(>  dralli  of  a  iicistm  who  sliall  liavc  dird 
wiiliiii  GO  days  after  the  aUcinpl  shall  have  bocn  made  to  institute  an 
action  ajxainst  liini  imi'suant  to  the  provisions  of  section  olt!),  is  dealt 
with  l>y  section  40.*?  of  the  Code,  and  other  special  provisions  arr  found 
in  the  following  sections.  The  operation  of  section  40:')  is  illustrated 
in  a  case  wlicre.  at  the  time  of  the  death  of  the  maker  of  a  note,  tlie 
six  years  had  not  inn  out  l»y  10  days.  He  died  Anj,Mist  12.  1SS7,  and 
letters  testamentary  were  issued  Manli  l'.".,  ISS!),  and  an  action  npon 
the  note  was  conmienced  ^Mardi  21,  1800. — two  years  and  a  half 
after  the  expiration  of  six  years  from  the  time  when  the  note  came 
due.  It  was  held  that  the  event  of  his  death  operated,  under  section 
lOo.  to  sustain  tlie  rnnninj:  of  the  statute  of  liniitaiions  upon  the 
liability,  for  under  that  section  it  is  provided  that  the  term  of  18 
mouths  after  the  death  is  not  a  part  of  the  time  limited  for  the  com- 
mencement of  an  action  against  the  executor  or  administrator.  The 
18  months  mentioned,  being  computed  as  calendar  months,  expired 
on  Felirnary  13.  1880.  Thus,  when  the  suspension  cansod  by  the  in- 
tervention of  the  statutory'  provision  was  at  an  end.  on  Feluuary  i:{th, 
the  running  of  the  six  years  was  resumed.  Of  tliat  year  there  had  re- 
mained just  40  days  when  the  testatrix  died,  and,  if  that  period  be 
computed  from  February  13,  1880,  it  brings  the  time  down  to  March 
2.">,  isso.  P.ut,  as  already  stated,  letters  testamentary  were  issued  on 
March  23.  and  under  section  403  the  plaintill  had  one  year  thereafter 
to  commence  tlie  actioa*'* 

18.     SEVERAL  CONCURRENT  DISABILITIES. 

It  sometimes  happens  that  several  distin<'t  disabilities  are  recognized 
by  statute  to  co-exist,  each  of  them  being  sunicient  for  tlie  time  being 
to  suspend  the  operation  of  the  statute.  Thns.  a  person  owning  a 
caus(?  of  action,  miglit  at  the  same  time  be  a  minor  and  also  impris- 
oned ou  a  ci'iminal  chai-ge.  or  a  minor  and  insane.  In  Mi<h  cases  it 
folhtws  tliat  the  statute  does  not  again  be;iiii  tn  iiiii  iinlil  all  disabili- 
ties are  removed.  If,  for  examjile.  a  pcis<»n  is  years  of  age  should  be 
imprihont'd  for  a  term  of  10  years,  there  would  bi-  no  leason  why  the 

JS"  Hull  V.  I'.n-nnnn.  140  N.  Y.  401),  Ho  N.  K.  »i<^).  Sec,  ulso,  Ailaiiiii  v.  Fas- 
B.tt.  U[)  N.  Y.  Gl,  43  N.  E.   JOS. 


wm:N  THK  action   is  commkvi  ki». 

suspension  of  llic  sl;i(iilc  slioiild  lie  for  a  h1ioiI<t  |MTiu(l  iliaii  it  wonhl 
have  been  if  lie  liad  hcni  of  full  a^^c  a(  llic  time  when  hiu  iniiiriHtiii- 
iiiciit  bewail.*'"' 

19.     AFTER  STATUTE  BEGINS  TO  RUN,  NO  SUSPENSION. 

**In  the  absence  of  express  statute  or  controlliii*;  adjudication  to 
the  contrary,  the  general  rule  is  \v<*ll  settled  thai,  when  tin-  Ktatute 
of  limitations  has  once  begun  to  run.  its  o|M'ration  is  not  kusimihIiiI 
by  a  subsequent  disability  to  sue."  ^*°  The  statutes  relating  to  ex- 
ce])tions  and  disabilities,  elsewhere  considered,  include  (pialili<ationM 
of  this  general  primi]tli'.  The  operation  of  the  general  principle  is 
illustrated  in  the  case  where  there  are  successive  owners  of  the  caus«» 
of  action,  or  of  equitable  relief,  and  the  right  to  pros«*cute  arises  in 
the  time  of  the  first.  Here  the  period  of  limitation  commenres  at 
that  time,  and  continues  attached  to  the  demand  during  the  several 
subsequent  changes;  and,  when  the  statutory  period  has  elapsed,  the 
demand  is  barred,  though  the  last  proprietor  has  recently  acquired  his 
right.'" 

20.     WHEN  THE  ACTION  IS  COMMENCED. 

Inasmuch  as  the  period  of  limitation  is  measured,  in  a  given  case, 
from  the  time  when  the  cause  of  action  accrues  to  tlie  time  when  ihe 
action  is  commenced,  it  is  important  to  determine  what  constitutes 
a  commencement  of  an  action.  This  is  a  matter  regulated  by  statute 
in  the  several  states.  In  New  York  it  is  provided  that  the  action 
is  begun  either  by  service  of  the  summons  upon  the  defendant,  or  by 
delivering  the  same,  for  the  purpose  of  service,  to  the  sheriff  or  other 
officer,  and  thereafter,  within  a  specified  period,  effecting  i)ersonal 
service  upon  the  defendant,  or  beginning  the  publication  of  the  sum- 
mons in  the  statutory  method.^** 

139  3  Pars.  Cont.  95;  Code  Civ.  Troc.  N.  Y.  §  400. 

1*0  Bausermau  v.  Bhmt,  147  U.  S.  G17-<;r.7. 13  Sup.  Ct.  4(;»'.;  WaMon  r.  f^ralz's 
Heirs.  1  Wheat.  292;  McDonald  v.  Hcivey.  110  U.  S.  G19,  4  Sup.  Ct.  142:  (Jrady 
V.  Wilson.  115  N.  C.  344.  20  S.  E.  518. 

141  BiKklin  V.  Biuklin.  1  Al)b.  Deo.  (N.  Y.)  251;  Conloy  v.  L<.l>delJ.  153  N.  Y. 
596-003.  47  N.  E.  78;]. 

1*2  Code  Civ.  Proc.  §§  39S.  .^.!>!>:  Riloy  v.  Pub  y,  141  N.  Y.  409,  30  N.  E.  308; 
Clare  v.  Loikanl,  122  N.  Y.  203,  25  N.  E.  391. 


.38  TllK   STATUTK    OK    MM  1  lATloNS. 


21.     THE  STATUTE  AFFECTS  THE  REMEDY  ONLY. 

The  stiilnlf  uf  limilJii  idiis  diics  iml.  nflci-  llic  prrsciilicil  iiniod.  dis- 
tliai^c  «ir  |»;iv  the  dclil.  luU  it  simply  l»;irs  a  iriiMMiy  lliciron.  The 
dclil,  and  llie  obligation  to  |»a.v  tlw  same  I'l-main,  and  tho  aibitrai-.v 
liai'  of  ilio  statute  alone  stand;*  in  llic  \\a\  ol"  tin-  cicditor  sceliinj;  to 
coinjtel  jiayinent.  The  lojiislalure  could  i(  |m  a!  ihc  statute  of  limita- 
tions, and  then  the  payment  of  a  de])t  upon  \viii(  li  the  lij^^lit  of  action 
was  barred  at  the  time  of  the  reiH-al  coidd  be  enforced  by  action,  and 
tile  statutory  ri;rhts  of  the  ddtior  are  not  invaded  by  such  le}j:isla- 
tion.^**  The  statute  of  limitations  acts  only  upon  the  remedy;  does 
not  imj)air  the  obli;xaliou  of  a  contract  nor  pay  a  debt,  nor  produce  a 
presumption  of  jjayment,  but  is  merely  a  statutory  bar  to  a  recov- 
ery.'** Tlius,  if  notes  are  given,  secured  by  a  mortgage  under  seal, 
the  fact  that  the  statute  has  run  against  the  notes  does  not  prevent 
a  foreclosure  of  the  mortgage,  as  to  which  the  longer  period  of  limita- 
ti(»n  applical)le  thereto  has  not  exjiired;  for  the  notes  are  not  paid, 
and,  until  lliey  are  paid,  the  mortgage  is  a  subsisting  security.'*'* 

22.  ABSENCE  FROM  THE  STATE. 

It  would  obviously  be  unjust  to  provide  that  a  claim  should  be 
barred  unless  prosecuted  within  a  specified  period,  without  also  nmk- 
ing  some  special  provision  for  the  case  of  absence  from  the  jurisdic- 
tion of  the  person  against  whom  the  action  should  be  brought;  for 
otherwise  lie  might,  by  absenting  himself,  render  it  impracticable  to 
institute  a  suit  a;.'ainst  him.  and  tiwu  return  after  the  statutory  period 

»<3  Cnniplx-ll  V.  lli.lt,  lir.  V.  S.  c.i'o.  c  Siip.  Ct.  L'ni). 

i4«  lluilMTt  V.  Clark.  V2S  N.  V.  ITJD,  liS  N.  K.  JWiS;  Quantock  v.  Enpland,  5 
r.iirrows.  llUli-S;    .Toll!)'-''!!  V    i;,iili<i:til  Cn  ,  .M   \,  Y.    lit".:    A)lcii  v.  Gleiiu,  K7  <;a. 

41-1.  13  s.  K.  r,(jr>. 

'<-  Ilullurt  V.  Clark.  li:s  .\.  Y.  i;:*.'..  L's  .\.  i;.  (;;!S;  J.cwis  v.  Hawkins,  'j;!  W  all. 
11!»;  HaKliii  V.  Hoyd.  ll.'i  U.  S.  T.'ii;,  .'  Sni».  Ct.  771;  Culdilcn;;]!  v.  .Inluisnn,  M 
Ark.  ?A2:  'I'linycr  v.  M.mmii.  V.)  I'ltk.  f.Mass.i  .':i.";  H.-iiicock  v.  Iiisiiiaiifc  Co.,  114 
MaHH.  l."!.'.;  .Ii.y  v.  A-laiiis,  L'U  Me.  .'WO;  llclknnp  v.  CJIcason,  11  Conn.  KIO;  T^mI- 
lou  V.  'rnyliir,  It  H.  I.  1.'77;  Spears  v.  Hartly,  3  KHp.  81;  Ili^jrlns  v.  .Stdii.  2 
r.arn.  A:  A<Iol.  41.''.;  .Taekson  v.  .^aeki-tt,  7  Wcml.  (.\.  Y.)  JM;  Pratt  v.  Hii^^'ins, 
Ltt  J'.artj.  iS.  Y.)  1.'77;  Ma.v(»r.  ete..  of  Now  York  v.  CdlKate,  1'2  N.  Y.  140;  Diu- 
nlny  v.  Cavin,  1  App.  Uly.  '-".iS,  .VJ  N.  Y.  Siipp.  is.",. 


FKDKKAr,    CONSTUICTIO.N    OV    STATI"    STAMTK-H.  •'•• 

had  cxpirocl,  and  (aUc  advaiita;^c  of  IIm-  l»af  of  llio  HlatuJo.  Arconl 
iii;;Iy,  stalulcs  of  liiuilalioii  usiiallv  pi-ovidf.  jis  lias  alifjidy  Iwmmi  wn-ii 
iu  respect  to  the  statutes  of  New  York,  that  the  nimiiii;:  of  th<*  Htat- 
ute  shall  be  siispeiidt'd  while  the  projioscd  d«-riiiiiaiit  is  out  of  the 
juiisdiclion.  The  various  stahilcs  dilTiM*  soiiicwhal  in  the  phraKO- 
ology  and  in  the  jiailic  iilais  adtiplcd  to  rf^znlalc  this  siilij«*«t.  It  haH 
been  held  that,  if  a  person  resides  in  aiHtiiirr  slate,  tlie  jiernMl  of  lim- 
itation does  not  run  as  to  a  claim  againsi  him,  uiKlcr  the  law  of  the 
forum,  even  though  he  has  an  onicc  for  the  transaction  of  businesH 
there,  or  owns  land  there;  ^*"  and  under  section  401  of  the  New 
York  Code,  if,  after  a  cause  of  action  has  accrued  against  a  person,  he 
deiiarls  from  the  state,  and  remains  continuously  absent  therefrom 
for  the  space  of  one  year  or  more,  the  time  of  his  abs<'nce  is  not  a 
part  of  the  time  limited  for  the  commencement  of  the  action.  Stat- 
utes which  provide  for  a  susi)cnsion  of  the  running  of  the  statute  dur- 
ing absence  of  the  debtor  from  the  state  and  until  his  return,  use  the 
term  "return''  in  the  sense  of  "come  into  the  state."  and  so  on<*  who 
comes  within  the  state  for  the  liisi  time  thereby  "returns"  to  it.  and 
until  then  the  stauile  do(>s  not  run.'*' 

23.     FEDERAL  CONSTRUCTION  OF  STATE    STATUTES. 

"The  courts  of  the  United  States,  in  the  absence  of  legislation 
ui>on  the  subject  by  concurrence,  recognize  the  statutes  of  limitation 
of  the  several  states,  and  give  tluMu  the  same  construction  ami  etT«'ct 
wliich  are  given  by  the  local  tribmials.  *  *  *  If  the  highest  judi- 
cial tribunal  of  a  state  adopts  new  views  as  to  the  proi>er  construc- 
tion of  such  a  statute,  and  reverses  its  former  decisions,  this  court  will 
follow  the  latest  settled  adjudications."^**  The  apjilication  of  this 
principle  is  not  alTected  by  the  fact  that  some  other  state,  other  than 
the  one  whose  laws  govern  the  case  in  hand,  has  adopted  a  different 

146  Bennett  v.  Cook.  41',  N.  Y.  .^'57;  Riker  v.  Curtis.  17  Misc.  Rep.  1.14-130. 
39  X.  Y,  Suiip.  ;i40;  Watorniau  v.  Mauufacturiug  Co.,  oo  Conn.  rM4.  57i'..  12  .\tl. 
240. 

147  Burrows  v.  Fiencli.  34  S.  C.  H».".  13  S.  E.  .3.");  Alexantler  r.  Bumrt,  5 
Rich.  Law  (S.  C.)  189;  Ruggles  v.  Keeler,  3  Johns.  (N.  Y.)  2<;-{:  Fowler  v.  Htrnt, 
10  .Tolins.  (X.  Y.)  4<}4.  See  Langdon  v.  Doud.  Si  Am.  Dec.  «U."»,  note:  Moore  ▼. 
Ariiisfronsr.  36  Am.  Dec.  7G:    Muslims  Re.v  v.  Gadban  [\Si\\]  2  Q.  B.  3.'.2. 

i*s  Bausermau  v.  Blunt,  147  U.  S.  G47-<]04,  13  Sup.  Ct.  4G(j. 


10  Tlir.    STATrTF,    OK    I. IMITATIONS. 

consfnirtion  of  a  similar  statulo.'*^  Nor  l»y  the  fart  ilial  Iho  case 
ill  hand  has  boon  docidod  hy  tho  circuit  court  of  tlie  ITniled  States 
prior  to  any  construction  by  the  state  court,  if.  subsoquonf  to  such 
(locision.  and  before  tho  arfjunicnt  of  tin-  appeal,  the  slahite  is  con- 
strued by  the  state  court.''"'  These  principles  have  been  applied  in 
numerous  cases."^  Thus,  the  state  construction  has  be<Mi  followed 
in  the  case  of  statutes  of  Tennessee,""  New  York.*"  Illinois/"*  and 
Ohio.*" 

24.  THE  LAW  OF  THE  FORUM  GOVERNS. 

The  limitation  of  actions  is  governed  by  the  lex  fori,  and  is  con- 
trolled by  the  lepslalure  of  the  state  in  which  the  action  is  brouj^ht, 
as  construed  by  the  hifihest  court  of  that  state,  even  if  the  lej;islative 
act  or  the  judicial  construction  differs  from  that  prevailing  in  other 
jurisdictions.**®  This  principle  operates  in  the  case  where  the  period 
of  liTnitati(»ii  in  aiiotlier  state  where  the  cause  of  action  arose  has  not 
expired,  altliough  that  of  the  state  where  the  action  is  brought  has  ex- 
pired, and  in  the  case  where  the  period  prescribed  by  the  laws  where 
the  action  is  brought  has  not  yet  expired,  although  that  of  the  state 
where  the  cause  of  action  arose  has  exi»ired.  In  both  cases  the  only 
(piestion  relates  to  the  operation  of  the  lex  fori,"'  But  a  state  can- 
not constitutionally  i»rovide  that  an  action  shall  not  be  brought  in  its 
courts  upon  a  judgment  recovered  in  another  state  upon  the  original 
cause  of  action,  which  would  have  been  barred  in  the  former  if  the 
original  action  had  been  brought  there.      Such  a  statute,  instead  of 

i<»  nuuserman  v.  IMiiiit,  U7  U.  S.  G^IT  tN">7,  K5  .Siip.  Ct.  4GG. 

160  HauBtrinan  v.  Hlunt,  147  U.  S.  W7-W37,  13  Sup.  Ct.  4(JC. 

161  HlfTKliiKon  v.  Mfiu,  4  Cniiicli,  4ir>-^19;  Sohn  v.  Watcrson.  17  Wall.  .''.0<>- 
t.oo;  I»avi.'  V.  I{ri««s.  1)7  U.  S.  V,2S  (i37;  Buvuvy  v.  Oclrlchs,  138  U.  S.  Olit),  11 
Sup.  Ct.  414. 

»'2  (;rccn  v.  Ni'al'.s  Lcssoo,  G  Pet.  LtM. 

>6«TloKa  H.  H.  V.  ItloHHhurB  &  C.  K.  U..  1*0  Wall.  i::7  143. 

16*  Kll)l)c  V.  I)itto,  !»3  U.  S.  (J74. 

166  .Mc.firi'H  V.  Itaiik.  104  U.  S.  (JIM). 

160  (;nat  WcHtorn  Tel.  Co.  v.  nmiiliam.  ir.2  V.  S.  339,  10  Sup.  Ct.  8.10;  Mot- 
.alf  V.  WaUTtown.  IM  U.  8.  G71,  r,i:,,  14  Sup.  Ct.  1M7:  Code  Civ.  Proc.  N.  Y. 
.  .';;K);  Wutcrrnan  v.  .ManufacturitiK  Co.,  50  Cuuu.  554,  570,  12  AU.  lilO;  Sisuoa 
V.  NIW'H.  f'A  Vt.  4Ut,  24  Atl.  W2. 

167  MJiltT  V.  lircubaoi,  US  N.  Y.  83. 


'iiii:   I  AW   Ml'  Tin:   koutm  oovkmnb.  41 

l)t'in;;  ;i  sinfnic  of  liiiiii;il  ions  in  jiiiv  Hi-nso  known  to  fhf  law,  in.  in 
legal  etTccl.  onl.v  iin  ;iltrnipl  to  give  operation  to  the  statute*  of  liniita 
lions  of  thai  slate  in  all  the  other  stales  of  the  Union  by  donying  the 
etlicacy  of  a  judgment  recovered  in  another  state,  for  any  cauw  of 
action  which  was  barred  in  her  tribunals.  Hmh  a  statute  Is  in  deroga 
tion  of  section  1  of  article  4  of  the  federal  constitution,  providing  that 
full  faith  and  credit  shall  be  given  in  each  state  to  Iho  public  actp,  ro<^ 
ords,  and  judicial  proceedings  of  every  other  state,  and  of  the  legisla- 
tion enacted  in  pursuance  of  that  provision.*'* 

IBS  Christmas  v.  Russoll,  5  Wall.  li!K). 


VEST  PUBLieaiNO  CO.,  PRINTERS  AND  ■TEJ:EOTYPEH«,  IT.  PAUL.  MUrK. 


CONFLlCr     OF     LAWS 


A  MONOGRAPH 


St.  Paul,  Minn. 
WKST  PUBIT-^HINC   CO. 


Copyright.  1899, 

BY 

WEST  PUBLISHING  COMPANY. 


CONFLICT    OF    LAWS. 


1.     INTRODUCTORY. 

Laws  have  no  foico  of  llicmselves.  bevoud  ilu-  juiisdiclion  uf  tlio  na 
tion  or  state  which  enacts  them,  and  can  have  extraterriioiial  » ff<i 
only  by  the  comity  of  other  nations  oi-  slalos.*  Very  frecpn-ntly.  Ii(»w- 
ever,  the  courts  of  a  given  jurisdiction  are  called  upon  to  (l«*al  with 
litigations  involving  questions  as  to  the  existence,  nature,  const  luti  ion. 
and  effect  of  the  laws  of  some  other  jurisdiction,  and  <'itlif*r  to  recoj?- 
nize  their  bearing  and  their  controlling  street,  or  to  hold  tlit-in  unavail- 
ing except  within  the  jurisdiction  whose  laws  they  are. 

Sometimes  these  questions  go  to  the  very  heart  of  the  litigation,  and 
involve,  according  to  the  answers  given  thereto,  the  right  to  maintain 
it  at  all  in  the  jurisdiction  selected,  while  sometimes,  where  the  right 
to  sue  in  the  jurisdiction  selected  is  un;issaihil)l('  or  unassaile<l.  ih«' 
questions  raised  in  respect  of  the  laws  of  some  other  state  or  country 
relate  to  the  effect  thereof;  for  example,  upon  the  validity  or  construe 
tion  of  some  instrument  executed  in  another  state,  and  upon  which  the 
action  is  based,  or  the  validity  of  a  foreign  marriage  or  divorce,  which  is 
either  directly  or  indirectly  involved,  or  the  binding  effect  of  a  foreign 
judgment  upon  which  the  action  is  brought,  or  the  enforceahility  of 
a  cause  of  action  arising  under  the  laws  of  some  other  state,  and  based 
on  facts  which  would  not  have  given  any  right  to  sue  if  they  had  bap 
pened  in  the  state  in  which  the  action  is  brought. 

There  are  certain  kinds  of  actions  which,  upon  commonly  accepted 
principles,  can  only  be  brought  in  the  jurisdiction  where  the  property 
to  be  affected  by  the  result  is  located,  or  where  the  transactions  ■ 
events  on  which  the  action  or  proceeding  is  based  occurred.      Th«>. 
cases  will  be  more  fully  considered  hereafter.      But  the  geneml  ml.- 

1  Huntington  v.  Attrill.  14G  U.  S.  657.  W9.  13  Sup.  Ct.  'J24:  !Iili..u  t.  (Jiiy.t. 
159  U.  S.  113,  163,  16  Sup.  Ct  139;  Marshall  v.  Sherman,  14S  N.  Y.  9.  25,  42 
N.  E.  419. 

CONF.L.— 1 


'J  CONKLICT    OF    LAWS. 

is  that,  ill  cases  of  othor  than  penal  aelions.  il\e  f(»it'i;^n  law,  if  not 
eontrarv  to  the  pultlic  pnrh  v  of  the  slate  where  tlie  actiou  is  broiij^hl, 
or  to  absiraet  jiisliec  or  pure  morals,  or  calriilated  to  injure  the  hitter 
state  or  its  citizens,  will  be  recoj;ni7,ed  and  enfoi-ced  there,  if  the  court 
has  jurisdiction  of  all  necessary  parties,  and  can  see  that,  consistcDtly 
w  itli  the  local  forms  of  procedure  and  law  of  trials,  it  can  do  substantial 
justiie  between  the  parties.  But  if  the  foreign  law  is  a  penal  stat- 
ute, or  ofl'ends  the  policy  of  the  state,  or  is  repugnant  to  justice  or 
to  good  morals,  or  is  calculated  to  injure  the  state  or  its  citizens,  or  if 
tlie  court  has  not  jurisdiction  of  parties  who  must  be  brought  in  to  en- 
able it  to  give  a  satisfactory  remedy,  or  if  under  the  local  forms  of  pro- 
cedure an  action  in  the  state  where  it  is  brought  cannot  give  a  substan- 
1  ial  remedy,  the  court  is  at  liberty  to  decline  jurisdiction.^ 

"International  law,  in  its  widest  and  most  comprehensive  sense,— 
including  not  only  questions  of  right  between  nations,  governed  by 
what  has  been  appropriately  called  the  law  of  nations,  but  also  ques- 
tions arising  under  what  is  usually  called  private  international  law, 
or  the  conflict  of  laws,  and  concerning  the  rights  of  persons  within  the 
territory  and  dominion  of  one  nation,  by  reason  of  acts,  private  or  pub- 
lic, done  within  the  dominions  of  another  nation, — is  part  of  our  law. 
and  must  be  ascertained  and  administered  by  the  courts  of  justice  as 
often  as  such  (piestions  are  presented  in  litigation  between  man  and 
man,  duly  submitted  to  their  determination.  The  most  certain  guide, 
no  doubt,  for  the  decision  of  such  questions,  is  a  treaty  or  statute  of 
this  country;  but  when  *  *  •  there  is  no  written  law  ui)on  the 
subject,  the  duty  still  rests  upon  the  judicial  tribunals  of  ascertaining 
and  declaring  what  the  law  is,  whenever  it  becomes  necessary  to  do  so, 
in  order  to  determine  the  rights  of  parties  to  suits  regularly  brought 
befoie  them.  In  doing  this  the  courts  must  obtain  such  aid  as  they 
can  from  judicial  decisions,  from  the  works  of  jurists  and  commenta- 
tors, and  fr(un  the  ads  and  usages  of  (•i\ili/,<'d  nations."' 

The  foregoing  quotation  relates  to  the  rights  of  i)ersons  within  the 
lerritorv  and  dominion  of  one  tmtian.  by  reason  of  acts,  private  or  pub- 
lic, (lone  w*itliin  the  dominions  of  another  luitlon.  The  same  principles 
would  be  aititlical)le  if  for  the  word  "nation"  we  substituted  the  word 

«  HigBins  V.  Railroad  Co.,  150  Mass.  17<;.  L'i)  N.  E.  r):54;  Mldlaud  Co.  v.  Broat, 
50  Minn.  .-C,2,  52  N.  W.  ^1!. 

»  Hilton  V,  Guyot,  15U  U.  S.  113,  103,  10  Sup.  Ct.  1.30. 


COMITY.  •> 

^'state,"  in  the  senso  of  one  of  Ihn  United  StalcH,  fxccpf  iliat.  unil<i  I  If 
federal  coustitutioii.  ccilaiu  spct  ial  juinisiouH  rcndt  r  ii  ohIi^at<»r> 
ujwn  each  stale  to  j;ive  ctlVct  to  certain  s|MMiiifd  actb  done  io  o\\ui 
states, — a  subject  to  be  discussed  hei-eafler. 

2.     DEFINITIONS. 

'Xex  loci  rei  sitae"  is  the  term  desifjnating  tlie  law  of  llu-  jdac- 
where  given  property  is  situated.  "Lex  loci  contractus"  in  the  law  of 
the  place  where  a  given  contract  is  made.  "Lex  loci  actus"  is  "the  law 
of  a  place  where  a  legal  transaction  takes  place."*  "Lex  loci  solu 
tionls"  is  the  law  of  the  place  where  a  given  contract  is  to  be  jm  r 
formed.  "Lex  loci  domicilii"  is  the  law  of  the  place  where  a  given  pti 
son  has  his  domicile.  "Lex  fori"  is  the  law  of  the  place  where  a  given 
action  or  proceeding  is  pending. 

3.     COMITY. 

As  already  stated,  no  law  has  any  etfect,  of  its  own  force,  beyond  the 
limits  of  the  sovereign  i)ower  from  which  its  authority  is  deriv»'d. 
The  extent  to  which  the  law  of  one  nation,  as  put  in  force  within  iis 
territory,  whether  by  executive  order,  by  legislative  act,  or  by  judicial 
decree,  shall  be  allowed  to  operate  within  the  dominion  of  another  n.i 
tion,  depends  upon  what  has  been  called  the  "comity  of  nations. 
"Comity,''  in  the  legal  sense,  is  neither  a  matter  of  absolute  obliga 
tion,  on  the  one  hand,  nor  of  mere  courtesy  and  good  will,  u[»ou  tic 
other.      But  it  is  the  recognition  which  one  nation  allows  within  its 
territory  to  the  legislative,  executive,  or  judicial  acts  of  another  nation, 
having  due  regard  both  to  international  duty  and  convenience,  ami  to 
the  rights  of  its  own  citizens  or  of  other  persons  who  are  under  fli 
protection  of  its  laws.^ 

4  Dicey,  Confl.  Laws,  74. 

5  Hilton  V.  Guyot,  159  U.  S.  113,  163,  16  Sup.  Ct.  139:  Marshall  v.  Sherman 
148  N.  Y.  9,  25,  42  N.  E.  419;  Story,  Confl.  Laws.  §§  23.  24,  28,  33.  38;  Saul  v. 
His  Creditors,  5  Mart.  N.  S.  (La.)  569,  5915;  Bank  of  Augusta  v.  Earle.  13  Per 
519,  589;   Wheat.  Int.  Law  (8th  Ed.)  §§  78,  79,  147. 


4  CONFLICT    OF    LAWS. 

JForrigji  Amgnees. 

"NMiile  the  statutes  of  one  state  can  in  no  cnso  Imvo  any  force  anil 
effect  in  another  state  ex  proprio  vigore,  and  hence  the  statutory  title 
of  foreii;n  assijjnecs  in  bankruptcy  can  have  no  recop;nition  solely  by 
virtue  of  the  forei{j;n  statute,  yet  the  comity  of  nations  allows  a  cer- 
tain effect  to  titles  derived  under,  and  powers  created  by,  the  laws  of 
other  countries,  and  from  such  comity  the  titles  of  foreifin  statutory 
assi«;nees  are  recognized  and  enforced  when  that  may  be  done  without 
injustice  to  the  citizens  of  the  state  where  such  recognition  is  sought, 
and  without  prejudice  to  the  rights  of  creditors  pursuing  their  remedies 
there  under  its  statutes,  and  provided  such  titles  are  not  in  contiict 
with  the  laws  or  public  policy  of  the  latter  state.  Subject  to  these 
conditions,  foreign  assignees  may  appear  and  maintain  suits  against 
debtors  of  the  bankrupt  whom  they  represent,  or  against  others  wha 
have  interfered  with  or  withhold  the  property  of  the  bankrupt.^ 

Foreign   Tmi.^tces. 

A  trustee  holding  title  under  an  instrument  executed  in  one  state  or 
country,  by  a  resident  thereof,  may  sue  in  another  state  or  country  to 
recover  trust  property,  or  damages  for  conversion,  for  he  has  the  legal 
title.^ 

Foreign  Executor  or  Administrator. 

An  executor  or  administrator  appointed  in  one  state  cannot  bring 
an  action  in  another  to  enforce  claims  in  favor  of  the  estate,  without 
first  taking  out  letters  in  the  latter.  But  a  voluntary  payment  to  such 
an  administrator  is  valid.' 

4.     LOCAL  AND  TRANSITORY  ACTIONS. 

Actions  are  designated  as  local  or  transitory,  according  as  they  must, 
on  the  one  hand,  be  brought  in  the  jurisdiction  where  the  subject-mat- 
ter is  located,  or  where  the  transactions  involved  occurred,  or,  on  the 

«  In  re  Waitf.  i)9  N.  Y.  \\\\\,  2  N.  E.  440. 

T  Toronto  fJeneral  Trust  Co.  v.  Chicago,  B.  &  Q.  K.  Co.,  VIW  X.  V.  Wi,  25  N.  E. 
108;  Bromlpy  v.  MltcheU,  1&5  Mass.  00!),  30  N.  K.  8;{.  Sec  I'.in.nh.iin  v.  Bank, 
112   N.  Y.  GGl,  19  N.  E.  416. 

«  Scliluter  V.  Bank,  117  N.  Y.  ]2r>,  12;».  22  N.  E.  r)72;  rarsons  v.  Lyman,  20 
N.  Y.  lo:;;  Wilkln.s  v.  Ellett,  9  Wall.  740;  Stevens  v.  Gaylord,  11  Mass.  256; 
I'almer  v.  Insurance  Co.,  84  N.  Y.  03,  07. 


I'KNAL    PU0CP:EDIN08    ARE    LOCAL. 


other  hand,  iiiiiy  bo  hi'(Hi<ilit  in  oilier  jinisditlioiis  wIiokp  court h  ai"- 
willinjjf  to  entertain  lluin."  The  distinction  will  \u-  Ix-st  judntt-d  out 
by  the  following  statement  of  the  principal  illnst rations  of  each  cla.«K: 

5.  PENAL  PROCEEDINGS  ARE  LOCAL. 

Every  crime  involves  the  doing  of  some  act  by  the  criminal;  every 
fiuch  act  must  be  done  at  some  particular  place;  and  it  is  then*,  and 
there  only,  that  it  constitutes  a  crime,  if  it  is  a  crime  at  all;  for,  if  a 
crime,  it  is  a  crime  against  the  sovereignty  having  jurisdiction  over 
that  place.^''  This  principle  has  been  briefly  exjjressed  as  follows: 
"The  courts  of  no  country  execute  the  penal  laws  of  another."  *^  In 
interpreting  this  maxim  there  is  danger  of  being  misled  by  the  differ- 
ent shades  of  meaning  allowed  to  the  word  "penal"  in  our  language. 
Strictly  and  primarily,  the  words  "penal"  and  "penalty"  denote  punish- 
ment, whether  corporal  or  pecuniary,  imposed  and  enforced  by  the 
state,  for  a  crime  or  offense  against  its  laws.^-  But  they  are  also 
commonly  used  as  including  any  extraordinary  liability  to  whicli  the 
law  subjects  a  wrongdoer,  in  favor  of  the  person  wronged,  not  limited 
to  the  damages  suffered,  and  even  as  including  cases  of  private  con- 
tracts wholly  independent  of  statutes,  as  in  the  case  of  ilie  penal  sum 
or  penalty  of  a  bond/^ 

The  test  whether  a  law  is  penal,  in  the  sti  id  and  primary  sense,  is 
whether  the  wrong  sought  to  be  redressed  is  a  wrong  to  the  ]tublic  or 
a  wrong  to  the  individual.  "The  rule  that  the  courts  of  no  country 
execute  the  penal  laws  of  another  applies  not  only  to  prosecutions  and 
sentences  for  crimes  and  misdemeanors,  but  to  all  suits  in  favor  of  the 
«tate,  for  the  recovery  of  pecuniary  penalties  for  any  violation  of  stat- 

9  Midland  Co.  v.  Broat,  50  Minn.  5^)2,  52  N.  W.  nil.'. 

10  Huntington  v.  Attrill,  146  U.  S.  657,  13  Sup.  Ct.  224;  Coiu.  v.  Pettes.  114 
Mass.  307;  State  v.  Kelly.  7G  Me.  331;  V.  S.  v.  Guiteau.  1  Mackey  (D.  C.)  40S; 
State  V.  Hall,  114  N.  C.  909,  19  S.  E.  G02;  Huntington  v.  Attrill  [1S93]  App. 
Cas.  150. 

11  The  Anteloi>e.  10  Wheat.  66,  123. 

12  u.  S.  V.  Reisiuger,  128  U.  S.  398,  402.  9  Sup.  Ct.  09:  U.  S.  v.  Chouteau. 
102  r.  S.  603,  Gil. 

13  Huntington  v.  AttriU,  146  U.  S.  G57,  6G7,  13  Sup.  Ct.  224. 


b  CONFLICT    OF    LAWS. 

iitcs.  for  the  protection  of  its  rc\(HMc.  or  oIIut  iiiiiiii(ii>;il  liiws,  ami  to 
all  judfjinents  for  such  iH'iialtics."  '* 

Thus,  in  the  case  hist  cited,  it  was  lield  tliat  the  Inited  States  su- 
preme court  liad  no  ori<;inal  jurisdiction  of  an  action  by  a  state  upon 
a  judj^inent  recovered  by  it  in  one  of  its  own  courts  aj;ainst  a  citizen  of 
anoihci-  state,  for  a  i)ecuuiary  penalty  for  a  \iohi(ion  of  its  municipal 
law.  So.  the  courts  of  a  state  cannot  be  compcUed  to  take  jurisdic- 
tion of  a  suit  to  recover  a  like  i)enalty  for  a  viohition  of  a  law  of  the 
I  inited  States.^  ^  So  (except  in  cases  removed  from  a  state  court  in 
obedience  to  an  express  act  of  congress,  in  order  to  protect  rights  un- 
der the  constitution  and  laws  of  the  Tnited  States),  a  circuit  court  of 
the  I'niled  States  cannot  entertain  jurisdiction  of  a  suit  in  behalf  of 
the  state,  to  recover  a  i)enalty  imposed  by  way  of  punishment  for  a 
violation  of  a  statute  of  the  state.^"  So.  again,  for  the  purposes  of 
extraterritorial  jurisdiction  it  has  been  held  that  actions  by  a  com- 
mon informer  to  recover  a  penalty  imposed  by  statute  for  an  offense 
against  the  law .  and  which  may  be  barred  by  a  pardon  granted  before 
action  brought,  may  stand  on  the  same  ground  as  suits  brought  for 
such  a  jM-nalty  in  the  name  of  the  state  or  its  officers.*"  And  personal 
disabilities  imjwsed  by  the  law  of  a  state  as  an  incident  or  consequence 
of  a  judicial  sentence  or  decree,  by  way  of  iMinishnient  of  an  offender, 
and  not  for  the  benefit  of  any  othei-  ju'rson. — such  as  attainder,  or 
infamy,  or  incompetency  of  a  convict  to  testify,  or  disqualitication  of 
the  guilty  party  to  a  cause  of  divorce  to  marry  again. — are  strictly 
penal,  and  therefore  have  no  extraterritorial  operation.^* 

On  the  other  hand,  if  the  statute  of  oiw  state  makes  a  j)erson  or  cor- 
poration, whose  wi-ongful  act.n«'glect.  or  defaidt  should  cause  the  death 
of  any  jierson.  liable  to  iin  ariiou  by  his  iidniiuisnator.  for  the  benefit 

n  Wisroiisiu  V.  Insurance  Co..  IL'T  I'.  S.  UC,."..  lMhi.  s  Sii]).  ("I.   l.".T0. 

15. Martin  v.  Uunler's  Lessee,  1  Wheat.  ;'.0l.  .■!.:o.  .■;:;T;  f.  S.  v.  Latlirop,  17 
.((.lins.  (X.  Y.)  4;  Ely  v.  Peck,  7  Couu.  2:59;  Slate  v.  Tike,  1.1  X.  II.  8:5.  85; 
Wanl  V.  .leiiklns,  10  Mete.  (Ma.ss.)  'jKi,  r»87. 

in(;wiii  V.  I?ree<llovo,  2  How.  L'!».  'M).  .'•7:  «;uiii  v.  M.-iitoii.  (!  llow.  7;  Iowa 
V.  Clileap).  li.  &  Q.  It.  Co..  ;!7  Fed.  -1!»7. 

>T  Adams  v.  Woods,  2  Craiieli.  ."..'.i;:  l'.  S.  \.  Coiiiior,  l.'.s  r.  S.  Ul.  CC.  11  Sup. 
Cf.  221>;    Hr.vaiit  v.  Ela.  Siuilli  (X.  II. t  :',1m;. 

!•>  Folliott  v.  OKdeii,  1  H.  lil.  VSl.  .'{  Term  H.  7Jt;:  Ln-.in  v.  T.  S..  Ml  1'.  S. 
2«W,  :J0.'!,  12  Sup.  Ct.  tU7;  Dickson  v.  Dickson's  Heirs.  1  Verf,'.  (Tenn.)  110; 
Corn.  v.  Laut,  113  Mas.s.  458,  471;    Vau  Vooiijis  v.  Brim  nail,  8ti  X.  Y.  18,  28,  20, 


PENAL    FR0CKEDING8    ARK    I>k:AI,. 


of  his  widow  and  next  of  kin,  to  recover  daiii;i;;<-s  fui   ilir*  [lOfiiniary 
injury  icsulliii^'  (o  thcni  from  IiIh  death,  su<h  an  a»  ti<m.  when-  thfd«;itli 
has  tak<'n  plate  in  tliat  state,  may.  upon  ^icneral  prin«ipleK  of  law.  Jif 
inaintain<*(l  in  a  federal  cirenit  court  held  in  another  state,  by  an  a«i 
ministiatoi-  of  the  deceased  appointed  in  ihal  slate;   fur.  althon{;h  ih- 
remedy  is  statutory,  the  action  is  mer<'ly  to  recover  daniai^'cs  foi   a 
civil  injury,  and   may   be  maintained   without   re;,'ard    to   whether  a 
simihu-  liability  would  have  attached  for  a  similai  r;nisc  in  the  siai< 
in  which  the  federal  court  is  held.^"     This  principle  has  been  adoj»t«-<l 
in  several  states.^"     JSo,  a  state  statute  makinj^  the  otlicers  of  a  corpo 
ration,  who  sign  and  record  a  false  certificate  of  the  amount  of  it«i 
capital  stock,  liable  for  all  its  debts,  is  in  no  sense  a  criminal  or  (juaai 
criminal  law.-^ 

The  question  whether,  in  a  given  case,  a  law  is  peixil.  and  an  action 
based  thereon  is  therefore  local,  or  is  nonpenal,  and  the  action  there 
fore  maintainable  in  other  jtnisdictions,  is  to  be  determini*d,  not  by 
the  name  applied  to  it  by  the  legislature  which  enacted  it,  nor  by  th«' 
construction  placed  upon  it  by  the  courts  of  that  jurisdiction,  but  by 
the  principles  of  international  law.  applied  by  the  court  appealed  to 
for  its  enforcement  in  another  state  or  country.  If  the  suit  is  origi 
nally  brought  in  a  federal  circuit  court,  that  court  must,  in  the  lirst 
instance,  decide  the  question  itself,  uncontrolled  by  local  decisions. 
If  a  suit  on  the  original  liability  under  the  statute  of  one  state  \» 
brought  in  a  court  of  another  state,  the  constitution  and  laws  of  the 
United  States  have  not  authorized  its  decision  upon  such  a  question 
to  be  reviewed  by  the  federal  supreme  court."  But  if  the  original 
liability  has  passed  into  judgment  in  one  state,  the  courts  of  another 
state,  when  asked  to  enforce  it,  are  bound  by  the  constitution  and  Liws 
of  the  United  States  to  give  full  faith  and  credit  to  that  judgment,  and 
if  they  do  not  their  decision  may  be  reviewed  by  the  federal  supreme 

19  Dcnnick  v.  Raihoad  Co.,  103  U.  S.  11;   Texas  &  P.  K.  Co.  v.  Cox.  145  V.  - 
593,  60.">,  12  Slip.  Ct.  905. 

soHorrick  v.  Railway  Co.,  31  Minn.  11.  KJ  N.  W.  ll.'.;    Chicago.  St.  I..  vV  N 
O.  R.  Co.  v.  Doyle,  60  Miss.  977:    KnijLrlu  v.   Railroad  Co..   los  I'a.   St.   ITjO; 
Morris  v.  Railway  Co.,  G5  Iowa.  727.  2^5  N.  W.  143:    Higgius  v.  Railroad  Co.. 
155  Mass.  176,  29  N.  E.  534. 

21  Huntington  v.  Attrill,  146  U.  S.  657.  13  Sup.  Ct.  224. 

22  Burgess  v.  Soligniau.  107  U.  S.  2<t.  33.  2  Sup.  Ct.  10. 
2  3  New  York  Life  Ins.  Co.  v.  llenJren,  92  U.  S.  2S0. 


•S  CONFLICT    OF    LAWS. 

roiirt  on  writ  of  error.'*  And  that  (onrl.  in  oidrr  to  drtciinino  wlicth- 
«M-  full  faith  and  crt^lit  was  j^ivon  to  tho  jiid;^Mni'nt  snod  on,  must  drtor- 
tnino  for  itself  wlu-thor  \\\v  original  cdiist'  of  action  is  iicnal  in  the  in- 
ternational sense;  for,  if  so,  the  mere  fact  of  putting'  it  in  lin'  form  of 
a  judjrnu'iit  does  not  cliange  its  essential  nature  and  nal  foumlation, 
and  so  ihe  jnd<rment  is  entitled  to  no  more  credit  in  another  state  than 
would  have  been  the  original  cause  of  action.-^ 

6.     ACTIONS  IN  REM  TO  DETERMINE  LAND  TITLES. 

I'roceiMlings  in  rem  to  determine  the  title  to  land  must  be  brought 
in  ihe  state  within  whose  borders  the  land  lies.-" 

7.     DAMAGES  FOR  TRESPASSES  TO  REAL  ESTATE. 

Whether  actions  to  recover  peeuniarv  damages  for  trespasses  to  real 
estate,  "of  which  the  causes  could  not  have  occurred  elsewhere  than 
where  they  did  occur,"  ^'  are  purely  local,  or  may  be  brought  in  anoth- 
er jurisdiction,  depends  ui)on  the  question  whether  they  are  viewed  as 
rtlating  to  the  real  estate  or  only  as  affording  a  personal  remedy.-* 
\\\  the  cnniiiion  law  of  l^ni:land.  adopted  in  most  <if  the  states  of  the 
I'nion.  such  actions  are  regarded  as  local,  and  can  be  brought  oidy 
where  the  laiMJ  is  situated.-"  But  in  some  states  and  countries  tliey 
are  regarded  as  transitory,  like  other  personal  actions;  and  whether 
an  action  for  trespass  to  land  in  one  state  can  be  brought  in  another 
slate  dejieiids  on  the  view  which  the  latter  state  takes  of  the  nature  of 
the  action.  For  instaiK-e,  Chief  Justice  Marshall  ln'ld  that  an  action 
could  n<jt  be  maintained  iti  N'iiginia,  by  whose  law  it  was  local,  for  a 
tresjuiss  to  land  in  I.<iuisiana.^"     On  the  other  liand.  an  action  fur  a 

2*  C;rtn-u  V,  Vail  Huskirk,  ".  Wall.  ."lOT,  ."Ul;  Craiu)  v.  Kdly,  !•;  Wall.  tWO, 
i;i5>:   fariM  liter  v.  .StraiiKc.  1  Jl  T.'.  S.  87,  lo.'t.  11  Sup.  <"t.  '.".o. 

»ft  HiiiitlnRton  V.  AttriU.  HO  IJ.  S.  (k".  <\K\,  13  Sup.  Ct.  lil'l;    liiiiiliinftoii  v. 

'rlll  IIS!..;|  App.  Cas.  1-|<». 

-•  llmiiiiiKt.iij  V.  Attrlli,  Mt;  i:.  S.  ii.".7.  ('.f.Ji.  i:!  Siii».  CI.  '1-1\. 

«T  Wi.»tl.  prlv.  Int.  Law,  p.  i:5. 

»•  IIuiitliiKtun  V,  Altrlll.  14«J  V.  S.  (>:.T.  OCD.  UJ  Siij).  (.'t.  -'I'l. 

2»  ElU-nwood  V.  Chnlr  Co.,  158  U.  8.  lOG.  15  Sup.  Ct.  771;  Ain.TJr.qn  TTiilon 
Tfl.  Co.  V.  Mlrldlctoti.  Mr»  N,  y.  4<XS:  l)i>nls.tn  v.  Mat  tin  ws.  I  {•.•mi  1{.  :m\\;  .Ml-- 
K.'niui  V.  rirtk.  1  How.  241.  24S. 

*•  LlvlngittuD  V.  JflTfrson,  1  linnk.  llo;!,  Ted.  (as.  No.  >s,411. 


LOCALITY    IN    KQUITY    SUITS.  9 

ti'ospnss  to  1,111(1  in  Illinuis.  wImtc  tlic  nile  of  tlic  coiniuon  law  pn 
vaik'd,  was  maintained  in  Ix)uisi:nia.'* 


8.     INJURIES  TO  PERSONS  OR  TO  MOVAHLF,  PROPKRTY. 

Tn  order  to  iiiaiiilain  an  action  for  an  injury  to  the  jkthoii  or  to 
movable  {jrojierty.  some  courts  have  held  lh;il  the  wrong  niuht  \n-  on.- 
Avliich  would  be  actionable  by  the  law  of  tlic  place  where  the  redre88  i 
sou^dU,  as  well  as  by  the  law  of  the  place  where  the  wrong  wa 
done;^-  while  in  others,  including  the  federal  courts,  a  private  action 
may  be  maintained  in  one  state,  if  not  contrary  to  its  own  fiolicy,  for  ' 
such  a  wrong  done  in  another,  aiKJ  actionable  there,  although  a  iik' 
wrong  would  not  be  actionable  in  the  state  where  the  suit  is  brought.*' 

9.     ACTIONS  ON  CONTRACT. 

As  a  general  proposition,  an  action  to  recover  damages  for  tic 
breach  of  a  contract,  or  specific  performance  of  its  terms,  is  trau.*-: 

tory,^* 

10.     LOCALITY  IN  EQUITY  SUITS. 

In  suits  in  equity  the  situation  [uesented  is  somewhat  different  from 
that  in  actions  at  law;  for  '"where  the  subject-matter  is  situated  with- 
in another  country  or  state,  but  the  jiarties  are  within  the  juriwliction 
of  the  court,  any  suit  may  be  maintained  and  remedy  granted  wiiicli 
directly  aft'ect  and  operate  upon  the  peison  of  the  defeiMlant.  and  not 
upon  the  subject-matter,  although  the  subject-matter  is  refei  r.  d  to  in 

31  Holmes  v.  Barclay,  4  La.  Ann.  63.     See,  also.  Compnnhia  de  M..,  .nr.,.]. 
V.  British  Soutli  Africa  Co.  11.^021  2  Q.  B.  358;    Crapin  v.  I.ovell.  H8  N.  Y.  Z>^ 
AUin  V.  Limiber  Co.,  150  Mas.s.  5()0.  23  N.  E.  r»Sl. 

32  The  Halloy,  L.  R.  2  P.  C.  1»3,  2M;  Phillips  v.  Eyre.  L.  K.  G  Q.  B.  1.  2S. 
29;  The  M.  Moxhaui,  1  Piob.  Dlv,  107,  111;  Wo<xlen  t.  Railroad  Co.,  126  N 
Y.  10,  20  X.  E.  1050;  Ash  v.  Railroad  Co..  72  Md.  lU.  19  All.  Ok'}. 

33  Smith  V,  Condry,  1  How.  28;  llie  China,  7  Wall.  53.  a»;  The  Soolbin.! 
105  U.  S.  24.  29;  Dennick  v.  Railroad  Co..  103  U.  S.  11;  Texas  &  V.  R.  Co.  v 
Cox,  145  U.  S.  593,  12  Sup.  Ct  9(Xi;  Walsh  v.  Railroad  Co..  100  Mass.  571.  .•> 
N.  E.  584.  Compare  Anderson  v.  Railway  Co..  37  Wis.  321:  Leonard  ▼.  Nav: 
gation  Co..  84  N.  Y.  48. 

3*  Midland  Co.  v.  Broat.  50  Minn.  562,  52  N.  W.  l>72;  Ulggins  v.  Railroad  Cc.. 
155  Mass.  ITG,  2'J  N.  E.  504. 


10  CONHUT    OK    LAWS, 

thi'  (Imt'c.  and  iln'  (Irfnulant  is  ordficd  to  do  or  icfiain  from  ctilain 
arfK  towards  it.  and  it  is  llius  nil  iniattlv.  Imt  indirrrlly.  alTrrtcd  h\  the 
rrlii'f  prant»Ml."  '* 

r«)ni»'r«iy  mentions,  as  rxamplcs  of  this  rnl*-,  suits  for  spctitlc  |M-r- 
formantc.  roliof  on  tlw  ^momikI  of  fraud,  linal  acrowntinfj:,  wttlomcnt  of 
parincrshiiis.  and  tho  like.  So.  where  an  action  is  liron;:ht,  for  ex- 
ample, in  Coiniecticnt.  iipt»n  a  New  York  j\ul;:ment,  altln»n;;li  the  jndjz- 
nieiit  sued  on  eanintt  he  atiaiked  in  that  anion,  on  the  ground  that 
it  was  procurod  by  fraud,  yet  the  defendant  may  file  a  bill  in  e«piity 
a^iainst  the  plaint itT.  alle^^in^'  that  the  jnd;;nient  was  procured  by 
fraud,  and.  upon  establisliin;:  his  allegations,  jii'ocnre  a  decree  enjoin- 
in;:  the  i)laintifr  from  proseeutinj;  the  action  upon  it.  And  in  sncli 
a  case,  if  an  action  is  subsecjuently  brou^^ht  upon  the  ori;^inal  jndp:- 
ment,  in  New  York,  where  it  was  ori;;inally  rendered,  the  decision  of 
the  Connecticut  court  that  it  had  been  obtained  by  fraud  would  be 
conclusive  in  New  York  ajfainst  its  validity.'"'  So.  the  courts  of  a 
state  have  power,  in  a  suit  in  e(|nity.  to  set  aside  a  jml;,'ment  or  decree 
obtained  by  fraud.  althon;:h  it  was  obtained  in  a  Tniied  States  court." 

Althou;,di  in  cases  of  trust,  of  contract,  and  of  framl.  the  jurisdiction 
of  a  court  of  chancery  may  be  sustaine<1  over  (he  person,  notwithstand- 
ing; lands  not  within  the  jurisdiction  may  be  alTected  by  the  decree," 
ye!  it  d(»es  not  follow  that  such  decree  is  in  itself  nece.ssarily  bindinjj 
upon  the  c(Mirts  of  the  stale  wliere  the  land  is  situated.  'Phus.  if  the 
court  of  a  state  in  whicli  land  is  not  situated,  instead  of  direct  in;:  Ji 
conveyance  or  in  some  way  exertin;:  c(mtrol  over  the  party,  in  (uder 
thereby  to  effectuate  its  decision,  merely  adjudii  ates  tipon  the  title, 
the  courts  of  the  state  where  the  land  lies  are  not  obli;:ed  thereby  to 
surrender  jurisdiction  to  the  court  renderin;:  the  decree,  by  accedin;; 
to  its  diMiHion.'" 

»S3  I'oin.  ]:«i.  Jur.  |  I.'JIS:  Duvl.s  v.  Curiiw.  ir.l  N  V.  17J.  ITS.  \:,  N.  K.  449; 
DobsoD  V.  rearcc',  12  N.  Y.  ir.«»:  Sli'vcns  v.  l'.;iiiU.  I  II  N.  V.  .".o.  .J'.i  N.  K.  CtS. 

•  «  DotiHoii  V.  iNjirec,  12  N.  Y.  l.'.ii. 

»'  Htcv«-iiH  V.  Hank,  141  N.  Y.  r»o.  :;•(  .\.  K.  r,s.  Sec.  .-ilsn,  Hiinlniry  v.  Mnii- 
l>ury,  1  IJcav.  .'U«;  lliTkfi>r<I  v.  Kcmlilc,  1  X\ui.  A.  S.  7;  W  r.Mt  i  Imrn  \.  Widdci- 
l»urii.  2  lU-av,  208;   Jones, v.  (fiddiK.  1   I'liil.  T'JI. 

•  •.Masxlo  V.  \Vatt«.  0  Crancli.  14*<. 

>•  CnriMiitcr  v.  StranKc  141  I'.  S,  ST.  KM!.  11  Sup.  f'f.  OCO;  Davis  v.  TToadloy, 
JJ  .\.  J.  1>|.  11.':  .MilltT  V.  MInlHJinu.  7  Ilaxt.  0«in"-;  •'»-'5>;  Ci>.»l«y  v.  Scarlett,  38 
III.  .".p;;    <;iir"linr  v.  Ot:<l«'iJ.  21:  N.  Y.  .".-'7. 


WIIAI     LAW     (iOVKIt.\>*    (oNlUAtTS.  11 


11.  WHAT  LAW  GOVERNS  CONTRACTS. 

(a)    0^nfrni-ts   Rilatiiif/  tn  ^'' Monifilis.'''' 

It   is  a   general  and   iinivtisal   iiih-  tlial    |M'rsonal   jirnp.  riv   hat*   no 
locality.       It  is  subjftt  to  tin-  law  of  tiic  owihi-'h  doiiiicil"-.  a*  vvi-ll  in 
r«'S|»<Mt  to  a  (lispoHilion  of  it  li\  ari  initi'  vivos  as  itH  tranniniKHion  by 
last  will  and  tostanimi.  and  iiy  sinossion  npun  an  own«T  dyinj:  in 
testate.-"' 

This  iiilc  jdocfrds  on  llif  liition  of  law  that  lln-  rldiniiil.-  drawn  t.i 
it  the  jn'isonal  csialc  of  i  he  owner,  wlieicvfr  it  may  haitp'-n  to  !»<• 
lint  this  tiction  is  by  no  means  of  nniversal  application.  an<l  vieldH 
wherever  it  is  necesisary,  for  the  puri)oses  of  justice,  tliat  the  actual 
situs  of  the  thinp;  should  be  examined,  and  alwavH  yields  when  the  law 
and  policy  of  the  state  where  the  yiroperly  is  locatffl  hnve  pn's«riN'<l 
a  ditferent  rule  of  transfer  from  that  of  the  state  where  the  ownor 
lives;  and  to  this  effect  are  all  the  authorities.*'  Thus,  a  K^^H'Tal 
assijinment  for  the  benefit  of  creditors,  which  is  operative  in  New 
York,  as  to  ])roperty  sitmUed  in  that  state.  cann(>t  oiM-rate  in  another 
state  to  pass  title  to  the  property  in  coutraveuliou  of  the  laws  of  that 
state."- 

So.  while  the  validity  of  a  disposition  of  personal  property  at  tie 
domicile  of  the  owner  is  ^^-nerally  the  test  of  its  validity  in  other  juri- 
dictions,  the  rule  only  requires  compliance  with  forms  and  with  prin 
ci]>les  of  law,  jieneial  or  nniversal.  reeo^jni/.ed  as  essential  to  the  trans 
fer  or  transmission  of  pro{)erty.     If  p«'rsoi»jd  property  is  dispc»H*<l  of  by 
will,  in  trust  for  charity,  to  take  etfect  in  anotlu-r  country,  no  v.^nM\ 
reason  is  apparent  for  insisting:  that  a  full  compliance  with  the  locid 
law  of  the  domicile  with  respect  to  the  form  or  duration  of  the  truhi. 
or  the  definition  of  the  beneficiaries,  is  necessars-  to  the  validity  of 
the  disposition.      Such  laws  are  not  jrenerally  re;:anled  as  limitations 
upon  the  power  of  the  owner  to  transf«>r  or  transmit  the  pr«>i»orty 
but  rejiulations  apjilicable  to  the  holdinj:  of  |»roi>«rty  in  a  parti,  nlar 
community,  founded  upon  political  or  soi-ial  considenitions.      Thus, 

40  Cross  v.  Trust  Co.,  131  N.  Y.  .'«0.  X\'d.  .10  N.  K.  I^-V 

41  Warner  v.  Jaffray,  96  N.  Y.  248,  25o;   CJreeu  v.  Van  l?u-u  rk.  T  Wall.  IX' 
Hervey  v.  Locomotive  Works.  93  V.  S.  664. 

4^  Warner  v.  Jaffray.  i't".  N.  Y.  248. 


12  CONFLICT    OF    LAWS. 

a  disposition  of  ]•<  rsoiial  proixMi  v  iiKidr  in  N'<\v  York  by  a  coiniM^tcnt 
t«'st;»l(»r.  in  a  valid  tcslaniontary  insdunH-nt,  to  trustees  in  a  foreif^n 
<-ountry.  for  the  i)iiriioso  of  a  cliarity  to  be  estaidished  in  tliat  eountiy, 
is  valid,  altlioujih  not  in  eonipliaiu'e  with  the  New  York  statute  or 
thr  rules  of  law  in  force  there  in  regard  to  trusts,  providing  it  is  valid 
l.y  the  law  of  the  place  where  the  gift  is  to  take  effect,  and  which 
governs  the  trustee  and  the  property  when  transinittcd  there.*'' 

n>i  Om/litional  Sahs. 

Where  a  chattel  is  sold  under  a  contract  executc.l  in  another  state, 
whereby  the  vendor  retains  the  legal  title  until  the  price  is  ]>aid.  the 
law  of  the  state  where  the  contract  was  made  will  govern  tlie  rights 
of  the  i)arties.** 
(c)   ContrnctA  Relating  to  ^'' Immovahlesy 

"It  is  a  principle  firmly  established  that  to  the  law  of  the  state  in 
which  the  land  is  situated  we  must  look  for  the  rules  which  govern  its 
possession,  alienation,  and  transfer,  and  for  the  elTect  and  construction 
of  wills."  *'  Thus,  for  example,  where  an  action  in  the  federal  courts 
involves  the  application  of  the  rule  in  Shelley \s  Case,  the  court  is  re- 
lieved from  the  consideration  of  the  innumerable  cases  in  which  the 
courts  in  England  and  in  the  several  states  of  the  Union  have  dealt 
with  its  origin  and  application,  and  has  only  to  do  with  the  rule  as  ex- 
pcjunded  and  applied  by  the  courts  of  the  state  in  which  the  land  lies.*" 

The  rule  which  subjects  a  contract  made  in  one  state  concerning 
land  in  aiK)ther  state  to  the  law  of  the  place  where  the  land  is  situated 
is  not  contined  in  its  operation  to  the  formal  execution  of  the  deed, 
but  extends  to  and  includes  all  ipn-slions  as  to  its  construction  and 

«>  Hope  v.  IJrewer,  \'M  N.  V.  V^'i.  l-«'.».  ."5-  N-  K-  •'•"••'^;  '-^o**^  v.  Trust  Co..  131 
N.  Y.  ;'-'.o.  .50  N.  K.  ll!."i;  Hurliank  v.  Whitney,  '2A  Pl.k.  (.Mass.)  154;  Fordyce 
V.  Hrl(l«th,  2  riill.  Ch.  W)1\  Vansant  v.  Uolu-rts,  3  .Md.  11!>.  Soo.  also,  in  Kcn- 
eral.  as  to  contracts  valid  where  made,  and  also  where  the  movable  pntperly  is 
Bitunttd.  and  the  recoj;nition  of  their  validity  elsewhere,  Cleveland  Mach.  Works 
V.  I.aiij;  (.N.  II.)  31  Atl.  'JO;  OfTutt  v.  Fla^k'.  K'  N  H  "'.  Wdiisltin  v.  Freyer, 
W,  Ala.  'i:~i,  t>  South,  lis.'*. 

««  Barrett  v.  Kelley.  06  Vt.  510,  LM>  Atl.  801);  Cobb  v.  Husweli.  37  Vt.  337; 
Holt  v.  Knowllon.  m<1  Me.  4.'>0,  1»  AU.  1113;  Cleveland  Maeh.  Works  v.  Laug 
(N.  n.)  31  Atl.  IHJ;   Marvin  Safe  Co.  v.  Norton.  4S  N.  J.  Law.  11<».  7  Atl.  4 IS. 

♦  »  De  VauKhn  v.  Iluchlnson.  Km  r.  S.  .'.c,(;,  17  ."^up.  Cl.  4<;i :  f.  S.  v.  Cio.sby, 
7  Cranch,  ll-'). 

«•  De  Vaugha  v.  IJuchlnsou,  It;.*!  U.  S.  50«i,  07",  17  Sui".  Ct.  4tll. 


\VII\r    LAW    f;()VKI{NH    CONTItAcmi,  18 

intcrpretalio!!.*^     Not  only  imiHt  n-sort  he  h.u]  lo  th«'  Inw  of  th«»  iilt« 
to  (Ictcnuinc  the  ((Uisl ruction  and  lc;jal  clT^'ct  of  a  (IimhI.  Itnt  alno  f 
(Iclcrniinc  whctlici'  llic  siiltjcct  niallt-r  of  tlif  inslrninf-nt  jh  real  or  \*> 
sonal.*"     The  (jiK'siion.  Itcin;;  one  of  fun  i;.'ii  law,  riniKt  In?  detemilni*<l 
by  the  oomt  upon  the  evidence  pi^-scnlcd,  in  ih«»  name  iiumncr  an  any 
other  question  of  faet.*" 

The  true  rule  to  follow,  in  cases  dependinj;  on  the  law  of  a  {lartinilar 
state,  is  to  adopt  the  construction  wliicli  the  com-tH  (»f  fliat  Htate 
have  fjiven  to  those  laws.'"  Tlius,  a  testator  domiciled  in  New  York 
devised  land  in  another  state  to  his  executors,  in  trust,  with  power  to 
collect  the  rents  and  profits,  sell  the  land  in  their  discretion,  and  r> 
invest  the  proceeds,  as  they  mij^ht  deem  advisable.  The  trusti^cH  were 
directed  to  i)ay  over  to  the  beneficiaries  the  rents  and  profits,  "and 
all  net  proceeds  of  sales,  made  pursuant  to  the  authority  so  piven 
them,  which  they  shall  deem  inadvisable  to  reinvest."  Testator  then 
"piave,  devised,  and  bequeathed"  all  the  property  of  which  the  trusteeu 
had  received  the  rents  and  protits,  and  all  the  residue  of  his  pr(»|MTty. 
"in  such  manner  that  the  parties,  theretofore  receiving  the  inconi 
only,  shall  receive  and  become  vested  with  the  estate  and  proin-rty  out 
of  which  such  income  arose."  And  it  was  held  that,  thou^'h  the 
trustees  sold  the  land  under  the  power,  and  brought  the  proceeds  into 
New  York  w  ithout  reinvesting  them,  such  proceeds  retained  the  char- 
acter of  realty,  and  the  testamentary  disposition  thereof  was  governe<l 
by  the  law  of  the  state  in  which  the  laml  was  situated." 

The  doctrine  applies  not  merely  to  what  is  actually  immovable,  but 
to  what  may  be  deemed  to  partake  of  an  immovable  or  real  natut 
by  the  law  of  the  locality.      Servitudes,  eas<'inents,  rents,  and  other  in 
corporeal  hereditaments  and  interests  in.  and  appurtenances  to.  land, 

*T  Genet  v.  Canal  Co.,  13  Misc.  Rep.  409.  4i;i.  .i.".  N.  Y.  Siipji.  147;  McGo-m 
V.  Scales,  9  Wall.  23. 

48  Genet  v.  Canal  Co.,  13  Misc.  R<'p.  4o;»,  421,  35  N.  Y.  Snpp.  147;  Cbapmaii 
V.  Robertson,  G  I'aigc  (N.  Y.)  027.  U-.O;  Iloll.rjok  v.  Mowman,  tY2  N.  H.  313: 
Bronson  v.  Lumber  Co.,  44  Minn.  34 S,  46  N.  W.  570. 

4  0  Genet  v.  Canal  Co.,  13  Misc.  Rep.  400.  421.  .^5  N.  Y.  Supp.  147:    Monn>«- 
V.  Douglass.  5  N.  Y.  447:    Kline  v.  Baker,  i>9  Mass.  2&4;    Concha  r.  Murrk-t 
40  Cb.  Div.  543. 

60  Elniendorf  v.  Taylor.  10  Wheat.  152.  1.59. 

61  Butler  V.  Green  (Sup.)  19  N.  Y.  Supp.  890. 


14  CONFI.UT    OK    LAWS. 

conic  within  tlu'  Ic^al  (Iclinilitin  of  "Iwrnl."  ;is  snlijcct  lo  tli<'  1<'.\  loii 
it'i  sitae.^^ 

12.     LEX  LOCI  REI  SITAE. 

In  Mildilion  to  the  itiinciplcs  clscwlicit'  stated  as  to  tlio  rontrolliim 
elTtrt  of  the  law  of  the  site  in  respect  to  contracts,  deeds,  assij^nnienls, 
and  other  transactions  atTectinj;  inunovalih'  j)roperty,  that  law  ex- 
clnsively  "governs  the  descent  and  heii-shiit  of  real  i)roperty.  No  p«'r- 
sons  can  take  by  descent  unless  iccofini/.ed  as  iesitiniate  heirs  by  the 
law  of  the  country  or  stale  where  the  land  lics.'^'  The  same  principle 
ap]»lies  to  devises  of  real  property."* 

Other  illustrations,  and  further  discussion,  of  the  law  of  the  site, 
both  witli  rc-iard  to  movable  and  immovable  property,  will  be  found 
uihler  other  heads,  where  for  convenience  it  is  treated  by  way  of  com- 
parison or  contrast  with  the  law  of  the  forum,  of  the  place  of  the 
contract,  etc. 

13.     LEX  LOCI  CONTRACTUS. 

An  instrument,  as  to  its  form  and  the  formalities  attending  its  exe- 
cution, must  be  tested  by  the  law  of  the  place  where  it  is  made."° 
Such  is  the  usual  statement  of  the  "general  rule,  and  yet  upon  the  <]ues- 
ti(m  by  what  law  the  execution,  interpretation,  and  validity  of  a  con- 
tract is  to  be  determined  there  are  dilTeient  theories  when  a  contract 
is  made  in  one  place  and  to  be  j)eif<»riiie(l  in  another.  Tluis,  in  Scud- 
<ler  v.  liank,^"  it  is  said  thai  "matters  bearing  upon  the  execution,  tin? 
interpretation,  and  the  validity  of  a  contiaci  are  deteimined  by  the 
law  of  the  i)lace  where  the  contract  is  made;  matters  connected  with 
its  j)erformance  are  regulated  by  the  law  prevailing  at  the  place  of 
performance;  matters  respecting  the  remedy,  such  as  the  bringing  of 
suits,  admissibility  of  evidence,  statute  of  limitation,  depend  ui)on  the 
law  of  the  place  where  the  suit  is  l)i()n;iht."      In  tliat  case  it   was  held 

'-•  I'.iilliT  V.  C.rci'U  (Siip.l  ]!>  N.  V.  Siipi..  S'.Mi.  S'.M:    Levy  v.  I>cv.v.  .!.■;  \.   ^  .  !»7. 

■•'••  WilllaniH  V.  KlinliJiil,  :;:.  Il.i.  TS."!.  H",  Suutii.  7s.".:  lU>yro  v.  City  nl'  St.  Louis. 
J'.t  Uarli.  (N.  Y.)  <».">0;  Umwcs  v.  Hoylsloii,  li  Mus.s.  :{;;7;  I'oitcr  v.  'I'it. dinlt,  'JJ 
Mt'.  .",o<»;    Duncan  v.  L.MWson.  41  Ch.  DIv.  .'MM. 

I*  (;uarante<'  Trust  A:  Safc-ncpdHit  Co.  v.  .Mji.wvi'i!  iN.  .1.;  M  All.  .{;«). 

6ft  Millrr  V.  Wll.M)n,  140  HI.  o'S6,  34  N.  E.  1111. 

6«'J1   U.  a.  40G,  4L2. 


I.I.X     I-(t(I    (MMKAtTUH.  1   ' 

thai  llu'  Milidity  of  an  airc|ilaiirc  in  ( "liir;i;^(i.  l.y  n  iikiiiImt  of  au 
Illinois  tiiin,  of  a  liill  of  ('X(lian;;<'.  drawn  in  ('ITKii^'o  niMiii  III"*  firm, 
was  to  1)(>  (lelciminrd  hy  (lit*  law  of  lllinoiH." 

In  the  LivtTpool  &  CI.  W.  Steam  Co.  Ca^*'.  it  in  said  that  a  n-vicw  of 
tlie  principal  cases  demonstrates  tiial.  according:  to  ih<-  ;.'nat  pn*- 
l)ondei'ance,  if  not  the  uniform  concurrence,  of  anthorit.v.  tin-  jii-iierul 
rule  that  the  nature,  the  obli^'ation,  and  the  int<'r|ii<iaiion  of  a  roiUniet 
are  to  be  f;overned  by  the  law  of  the  place  Winn-  it  is  made,  unlejw 
the  parties  at  the  time  of  makin;^  it  have  suiii.-  n\\u-i  law  in  \irw.'' 
requires  a  contra<t  of  an'r-eiuhlmenl  mad<'  in  oiif  conniiy.  bctw»«'n  «iii- 
zens  or  residents  thereof,  and  the  iierlorman.  <•  of  whi.  ji  l..-;;ins  tin  if.  to 
be  governed  by  the  law  of  that  country,""  nnhss  lh»'  parties,  wh.-n  en- 
teriug  into  the  contract,  clearly  manifest  a  mutual  ini<iition  that  it 
shall  be  governed  by  the  law  of  some  other  count  ly."" 

But,  as  already  stated,  the  parties  nuiy  contract  with  n-f.  rm.*.  to 
the  law  of  the  state  where  the  contract  is  to  be  pnfornKd.  and  in  such 
case  its  validity  and  interpretation  are  to  be  driLMinined  according  to 
the  law  of  the  latter  place."'  Thus,  if  I  Ik-  int.n-st  alh)wr-d  by  thr  lawH 
of  the  place  of  performance  is  higlwi-  ilian  iliai  p.nnitt.'d  at  tli<-  j.lact? 
of  the  contract,  the  parties  may  stipulate  for  the  higher  interest  witii- 
out  incurring  the  penalty  of  usury; "-  though,  if  a  promissory  note  is 
made,  for  example,  in  New  YoiU.  by  a  resident  of  that  state,  and  \K\y- 
able  within  the  state,  and  intended  t<.  be  discounted  there,  and  no  rate 
of  interest  is  mentioned,  and  it  is  in  fact  discounted  in  another  stale, 
at  a  rate  of  interest  valid  according  to  the  laws  of  tin-  latter  state,  but 
in  excess  of  the  rate  allowed  in  New  York,  it  is  invalid;*'  and  if  a 
draft  made  in  one  state,  by  paities  residing  th.re.  is  payable  in  an 

B7  See,  also,  Livcii)ool  i"s:  <;.  \V.  Slcjiin  Co.  v.  I'liciiix  lu-s.  Co..  129  T'.  S.  3»7. 
453,  9  Sup.  Ct.  4(il>:   Oliphant  v.  V:uiiitst.  ."..S  N.  .7.  Law.  ItrJ.  X\  All.  .".82. 

08  Hamlyu  v.  Tali.-^ker  Distillery  IISIMJ  App.  Ca.-^.  l^oii. 

6  8  Taylor  v.  Sharp,  108  N.  C.  377.  13  S.  E.  138. 

80  See,  as  to  promissory  notes.  Mc(;arry  v.  Nicklin.  110  Ala.  .V.;t.  17  South. 
72G;    Case  v.  Dodjio.  18  R.  I.  GOl.  20  All.  7S.-. 

61  lu  re  Missouri  S.  S.  Co..  42  Cli.  Div.  :{21:  Davis  v.  Insuraiue  Co.  .N.  H  » 
34  Atl.  4(J4;   Hart  v.  Machine  Oo..  72  Miss.  .^Ut,  .^28.  17  South.  7n». 

6  2  Andrews  v.  Poud.  13  Pet.  (>):  Loudou  Assurance  v.  Compauhia  de  Moagon*. 
167  V.  S.  149.  161.  17  Sup.  Ct.  7S."». 

6  3  Dickinson  v,  Edwards,  77  N.  Y.  573. 


10  CONFI.ICT    OF    LAWS. 

otluT.  where  the  drawee  resides,  the  law  of  the  lattor  state,  in  respect 
to  pivsentation  and  demand  for  payment,  is  oon(rollin<,'/" 

In  New  York  it  is  held  that  the  lex  loci  solutionis  and  the  lex  loci 
contractus  must  both  be  taken  into  consideration,  neither,  of  itself, 
boin^'  conclusive,  but  the  two  must  be  considered  in  connection  with 
the  whole  contract,  and  the  circumstances  under  which  the  parties 
acted,  in  determining  the  question  of  their  intent.'' '  In  some  states 
it  is  held  that,  in  the  absence  of  a  contrary  intention,  when  a  contract 
is  made  in  one  place  or  country,  to  be  performed  in  another,  its 
validity  and  effect  are  to  be  determined  by  the  law  of  the  place  of  per- 
foniiance.®^ 

If  a  stipulation  in  a  contract  with  a  common  carrier,  relieving  the 
carrier  from  liability  for  injuries  resulting  from  the  negligence  of  its 
servants,  is  valid  where  made,  it  will  be  enforced,  and,  if  void  there, 
will  not  be  enforced,  on  principles  of  comity,  in  another  jurisdiction, 
although  contrary  to  its  own  local  policy.''^ 

14.     DEFENSES    AND  DISCHARGES. 

The  general  rule,  as  stated  by  Story,  is  that  a  defense  or  discharge, 
good  by  the  law  of  the  place  whore  the  contract  is  made  or  is  to  be 
f>erformed,  is  to  be  of  equal  validity  in  every  other  place  where  the 
(|ucsiion  may  come  to  be  litigated.*^®     Thus,  infancy,  if  a  valid  de- 

0*  Sylvester  v.  Crohan.  138  N.  Y.  4m.  .3-4  N.  E.  273.  See  Douglas  v.  Bank, 
1«7  Teiin.  133,  3G  S.  W.  874;   Abt  v.  Hank.  150  111.  4(!7,  42  N.  E.  85G. 

8  6  Wilson  V.  Mill  Co.,  150  N.  Y.  314,  323,  44  N.  E.  909. 

««  Burnett  v.  Kallroad  Co.,  17G  Pa.  St.  45,  34  Atl.  972;  Abt  v.  Bank,  159  111. 
4(;7,  42  N.  K.  850. 

«7  O'licgan  V.  Steamship  Co.,  160  Mass.  306,  361,  35  N.  E.  1070;  Davis  v. 
Hallway  Co.,  93  Wis.  470,  480,  67  N.  W.  16,  1132;  Fonseca  v.  Steamslilp  Co., 
ir..',  Mass.  r>r/.i,  27  N.  E.  6G5;  Brockway  v.  E.xpress  Co.,  IGS  Mass.  257,  47  N.  B. 
87.  So,  as  to  telegrams,  Keetl  v.  Telegraph  Co.,  135  Mo.  601,  37  S.  W.  904. 
otherwise,  in  the  federal  courts,  The  Iowa,  50  Fed.  501;  even  thouRli  the  par- 
tji  H  stli)u!ate  to  be  governed  by  the  fonlKU  law.  The  Knergia,  50  Fed.  124; 
Ty<\vis(ilin  V.  Steamship  Co.,  56  Fed.  602.  Upon  the  question  of  when  it  is  that 
n  rori tract,  as.  for  example,  an  insurance  policy,  becomes  complete,  so  as  to  de- 
ftrniinc  the  "place  of  the  contract,"  see  Curnow  v.  Insurance  Co.,  37  S.  E.  406, 
K;  S.  E.  132;    iMpiltable  Life  Assur.  Soc.  v.  Cleiiiciils,  140  U.  S.  220,  11  Sup.  Ct. 

S'J'J 

'"•  Story,  Confl.  Laws,  8  331. 


THK    LAW    OF    THK    PLACIO    OF    I'KKKOKM ANCE.  IT 

fense  by  the  lex  loci  contractus,  will  lie  a  valiil  <i«fcnHo  cvcrywhorc.*' 
The  tender  and  refusal,  jrood  bv  the  saiiu*  law.  ciilitT  ah  a  full  dis 
charji;e  or  as  a  present  fultillnient  of  the  conlrad.  will  l>o  r('S|>f'«l<Ml 
everywhere.'"     Pa^'ment  in  paper  money,  bills,  or  in  oilier  ihin^H,  if 
*,food  by  Ihc  same  law,  will  be  deemed  a  sutlicicnl    p;i\in<'iit   i\ii\ 
where. '^^ 

And,  on  the  other  hand,  whoie  a  payment  l>y  ne;,'(tii;il»le  bills  or 
notes  is  by  the  lex  loci  contractus  held  to  be  a  conditional  payment 
only,  it  will  be  so  hold,  even  in  states  where  such  payment  tinder  the 
domestic  law  would  be  held  absolute.  So,  if,  by  the  law  of  iln-  jdace 
of  the  contract,  equitable  defenses  are  alhtwed  in  fa\nr  <»!  ilie  niakiT 
of  a  nejjotiable  note,  any  subsequent  indorsement  will  not  change 
his  rights  in  regard  to  the  holder.  The  latter  must  take  it  cum 
ODere.^* 

15.  THE  LAW  OF  THE  PLACE  OF  PERFORMANCE. 

In  every  forum,  a  contract  is  governed  by  the  law  with  a  view  to 
which  it  was  made.'^  The  law  of  the  place  where  a  contract  is  maile 
can  never  be  the  rule  where  the  transaction  is  entered  into  with  an 
express  view  of  adopting  the  law  of  another  country  as  the  rule  by 
which  it  is  to  be  governed.'*  It  is  upon  this  ground  that  the  presump 
^  tion  rests  that  the  contract  is  to  be  performed  at  the  place  where  it  is 
made,  and  to  be  governed  by  its  laws,  where  there  is  nothing  in  its 
terms,  or  in  the  explanatory  circumstances  of  its  execution,  inconsist- 
ent with  that  i9*ftition.  It  is  the  w  ill  of  the  contracting  parties,  and 
not  the  law,  which  fixes  the  place  of  fulfillment.^" 

But  if  no  place  is  designated,  the  place  of  sale  is  the  point  at 
which  goods  ordered  or  purchased  are  set  apart  and  delivered  to  the 

69  Thompson  v.  Ketchum,  8  Johus.  (N.  Y.)  IS'.):   Male  v.  Koberis.  :>  Ksp.  i-. 

7  0  Warder  v.  Arcll,  2  Wasb.  (Va.)  2S2. 

71  Searight  v.  Calbraith,  4  Dall.  Sl^o. 

72Evaus  V.  Gray,  12  Mart.  O.  S.  (La.)  475;   Story,  Confl.  L.nw-    s  ;:.:j. 

7  3  Pritcbard  v.  Norton.  106  U.  S.  124,  136.  1  Sup.  Ct.  102. 

7  4  Robiuson  v.  Bland,  2  Burrows.  1077,  107S;   Le  Breton  v.  Miles.  S  I'aige  (N. 

Y.)  261. 
75  4  Phillim.  Int  Law,  469,  47U.     See,  iilso,  Meyer  v.  Richards,  163  U.  S.  »5. 

16  Sup.  Ct.  1148. 
CONF.L.— 2 


18  CONKMCT    OF    LAWS. 

jiuit  lijisrr.""  ''blatters  connected  with  tlu-  performance  of  a  contract 
are  rcjiulMlcd  by  the  law  prevaillnj;  at  the  phice  of  the  performance."  '^ 
The  nUe  that  the  oblijiation  of  sliippers  of  a  carj!:o  is  1o  be  determined 
by  the  hiw  of  the  phue  where  Ihe  contract  of  affreightment  was 
iii;i(h' ■"  disjioscs  of  any  tlieoiy  thai  f he  (jiicst ion  can  be  affected  by  the 
"hiw  of  the  llag."  Tlie  fact  tliat  tlie  vessel,  for  instance,  was  Italian, 
docs  not  subject  the  contract  of  shipment  to  the  operation  of  tlic 
Italian  rommercial  Code.^* 

Jni.rr.st. 

The  general  proposition  is  that  where  a  ])romissory  note  or  other 
obligation  for  the  ]»ayincnt  or  forbearance  of  money  is  made  in  one 
stale,  and  i)ayable  in  another,  tiie  parlies  may  voluntarily  agree  ujjon 
a  rate  of  interest  allowed  by  the  laws  either  of  the  state  where  the 
obligation  is  made,  or  by  the  laws  of  the  state  where  it  is  made  pay- 
able. If  a  party  goes  into  another  state,  and  there  makes  an  agree- 
ment with  a  citi/.en  of  that  state  for  the  loan  or  forbearance  of  money, 
lawful  by  the  laws  of  that  state,  he  does  not  render  his  obligation 
void  by  making  it  payable  in  another  state,  under  whose  laws  the 
contract  would  be  usurious.  ]S'either  can  it  be  claimed  that,  because 
the  obligation,  instead  of  being  signed  in  the  state  where  the  contract 
was  made,  is  signed  in  another  state,  and  sent  by  mail  to  the  place 
of  the  contract,  it  must  be  governed  by  the  local  laws  of  the  i>lace 
where  it  was  signed. **" 

Where  a  contract  of  loan  is  made  between  a  citizen  of  Illinois  and  a 

76  ivrlniiiu  V.  Sarluiius.  UVl  I'm.  St.  :'.2U,  21)  All.  852. 

-^  AVaverly  Nat.  Bank  v.  ll.ill.  ir>0  Pa.  St.  40G,  473.  24  Atl.  CC":  Scuddor  v. 
Bank,  01  U.  S.  4(M;;    Prit.li.inl  v.  Xnrton,  Km;  U.  S.  124,  1  Sup.  Ct.  102. 

7«  Liverpool  &  G.  \V.  Steam  Co.  v.  IMicnix  Ins.  Co.,  121)  U.  S.  31)7,  D  Sup.  Ct. 
4(rj. 

-"  China  Mut.  Ins.  Co.  v.  Force,  142  N.  Y.  DO.  100,  3(;  N.  E.  874. 

to  Wayne  Co.  Sav.  Bank  v.  Low.  SI  N.  Y.  .'.CJU:  Jackson  v.  MoitsaRc  Co.,  8.S 
C.ii.  7r.r,.  1.",  S.  E.  H12;  .Mott  v.  Uowland.  S.'.  Mi.ii.  ."C.l,  4S  .\.  W.  iV-W,  New 
EtiKiand  Mortj;.  Si-e.  Co.  v.  McLauKlilin.  S7  Ca.  1.  1.'!  S.  \\.  SI;  Staiilcs  v.  Nott. 
12.S  .\.  Y.  lo:;.  2S  N.  E.  r»l.'»:  Andrews  v.  I'mid.  l".  I'd.  f,.".;  Loudon  Assurance 
V.  Coni|>anlii.i  d<'  Moajicns  Do  Baircini.  HIT  I'.  S.  II!).  ir,l.  17  Sup.  CI.  7.S.'".: 
Nickels  V.  .\s.s<M-iati<)ii.  !);5  Va.  .".HO,  2r.  S.  Iv  S.  See  Clidd.'ii  v.  Clianilieiiin.  Km 
.\Ia.-s.  48(5.  4ti  N.  10.  10.'*.;  Cnited  Slates  Savings  \-  Loan  Co.  v.  Seotl.  !>S  Ky. 
•  ;!»."..  :'.4  S.  W.  2:'..":  Ainorlcau  Eieeliold  I^and  &  Moilyage  Co.  v.  Jefferson,  Gi) 
.\li-s.  770,   12  Soulli.  4G4. 


LEX     DOMKII  II. 


<:oi'i(()i<i(i()n  of  roiiiKM  I  iciil ,  mikI  ImmkIs  me  cxcciittMl  in  Illinois.  piivaM' 
in  a  third  stale,  and  secured  by  inoilj^ai^e  upon  real  eslatf  sitiialcd  in 
Illinois,  the  defense  of  usury  cannot  be  sustaiin*d  upon  tin*  ground 
simply  that  the  rate  of  interest  exacted  or  renerved  \h  in  exceKK  of  tbiit 
allowed  by  the  slate  in  w  liidi  the  bonds  are  made  pa\able.'^ 


16.     LEX  DOMICILII. 

The  domicile  of  a  person  is  "tlie  jilace  <»r  coiintry  which  is  mnsid 
ered  by  law  to  be  his  ijermanent  home."  ''-     Thai  jihicr  is  inopcily  tie 
doniicile  of  a  person  in  which  the  habitation  is  lixed,  wiihout   any 
piesent  intention  of  removin;i-  therefrom. "='     As  «;enerally  defined,  a 
person's  domicile  is  the  place  where  lie  has  his  true,  fixed,  and  pcrma 
neut  home,  and  principal  establishmenl.  and  to  whidi.  if  he  is  absent, 
he  has  the  intention  of  returninji.     r.e^innin^^  life  as  an  infant,  every 
person  is  at  first  necessarily  dependent.     When  he  becomes  an  inde- 
pendent person,  he  will  find  himself  in  jwssesslon  of  a  domicile,  which 
in  most  cases  will  be  at  the  place  of  his  liirtli.  or  '''duiiurlbnf  tn-nim^ 
as  it  is  termed.     By  his  own  act  and  will,  he  can  then  acquire  for 
himself  a  legal  home  or  domicile  diiTerent  from  that  of  ori-^in.  termed 
a  '\loiiiicile  of  choice.''     This  is  ac<|iiired  by  actual  residence,  couple 
with  the  intention  to  reside  in  a  given  place  or  country,  and  cannot 
be  acquired  in  any  other  way.     For  that  puipose,  residence  neetl  not 
be  of  long  duration.     If  the  intention  of  permanently  residing  in  a 
particular  place  exists,  a  residence  in  pursuance  of  that  intent,  ho\\ 
ever  short,  will  establish  a  domicile.     The  reipiisite  animus  is  present 
intention  of  permanent  or  indefinite  resideiKc  in  a  given  plac<'  or 
country,  or,  negatively  expressed,  the  absence  of  any  present  inten- 
tion of  not  residing  there  permanently  or  indefinitely.     Domicile  of 
origin  must  be  presumed  to  continue  until  another  sole  doniicile  has 
been  acquired,  by  actual  residence,   coupled   with   the  intention  of 
abandoning  the  domicile  of  origin.     This  change  must   be  anirao  et 

81  Fowler  v.  Trus^t  Co..  141  U.  S.  :384.  'A\)~.  12  Sup.  Ct.  1. 

82  Dicey,  Dom.  p.  1. 

-'<;<  111  re  Craiiinish  [1892]  3  Cli.  180.  102:  Story.  Confl.  I^aw.s  8  4:iO:  H.nyoa  v 
Hayes,  74  lU.  312,  314.  See,  also,  Foote,  Int.  Jur.  c.  2;  Westl.  Priv.  Jut.  La^^ 
c.  14, 


-0  CONFLICT    OF    I.WVS. 

fiU'to.  niid  the  Imiilcti  of  pKtdf  is  on  \hv  party  wlio  asserts  llir  cliaii^ic** 
Tims,  if  one  is  (■oiiiiniitctl  to  a  prison.  In-  lias  a  rcsidonce  somewhere 
iK^foii'  i^oin;:  tlicic.  and  Ix-forr  lie  can  flian^'c  that  i(  wonld  1»'  ro<inisito 
that  he  should  {jjo  to  the  prison  intendin;.;  to  make  that  his  home  and 
domieile,  either  iK'rmanently  or  for  some  unlimited  (ini<'.  ami  without 
any  intention  of  returning  or  reverting  to  his  former  residen<'e,  and 
in  fact  intending  tlu'reby  to  change  his  fomier  residence  to  the  i)rison. 
But  a  prison  is  not  a  place  of  residence  for  a  prisonei*.  It  is  not 
constructed  or  maintained  for  that  purpose.  It  is  a  |)lace  of  confine- 
ment for  all  except  the  warden  and  his  family,  and  a  ])erson  cannot, 
under  guise  of  a  commitment,  or  even  without  any  commitment,  go 
there  as  a  prisoner,  having  a  right  to  be  there  only  as  a  prisoner,  and 
thereby  gain  a  residence  there.*' 

17.     RESIDENCE,  INHABITANCY,  AND  DOMICILE  COMPARED. 

"S'arious  statutes  and  rules  of  law  employ,  for  the  purposes  of  their 
varying  provisions,  the  terms  "residence,"  "inhaltitancy,"  and  "domi- 
cile," and  to  some  extent  the  meaning  to  be  attaclied  to  each  of  these 
terms  varies  according  to  the  subject-matter  or  context  or  pur]>()se 
of  the  statute  or  rule.  Thus,  it  has  been  held  that,  within  the  mean- 
ing of  statutes  regulating  attachments  against  the  property  of  debt- 
ors, and  arrest  on  civil  process  for  debts,  it  was  actual  residence  of 
the  defendant,  and  not  his  domicile,  that  determined  the  rights  of  the 
parties;"  and  a  siinilai-  construction  has  bi'en  given  to  the  clause, 
sometimes  found  in  statutes  of  limitations,  providing  that  if,  after  the 
cause  of  action  shall  have  accrued,  the  defendant  shall  "depart  from, 
and  reside  otit  of,  the  stale,"  the  time  of  his  absence  shall  not  be  in- 
cluded in  the  period  of  limitation."^ 

In  general,  inhabitancy  and  i-esidence  d«»  not  mean  luccisely  the 
Kirne  thing  as  domicile,  when  the  lattei-  term  is  apiilied  to  succession 

•♦Trice  V.  Price.  l.'C  Pa.  .St.  r,l7.  21  .Ml,  Lttl;  Anders.. n  v.  W.ilt.  i:;.S  U.  S. 
eJM.  70<5.  11  .Sup.  Ct.  W'X 

•  6  People  V.  Cudy,  M.".  .\.  Y.  1(K»,  ;{7  .\.  K.  CT.'!.  As  to  dnnilcili'  of  orJKln 
and  (lonilcilc  of  cholc*'.  m-v,  also,  lu  re  CrnlKnlsh  |ls;rj|  ,3  di.  ISO;  Mdinlcllf  (if  a 
lunatic.  .Sharpe  v.  CrlBpln.  L.  R.  1  Prnb.  &  Dlv.  Ull,  (US;  Ininliiirl  v.  liutter- 
fleld.  :rr  Cb.  I>lv.  :r.7;    .Mowry  v,  Lnihani,  17  U.  I.  480.  23  Atl.  la. 

«">  IVntield  V.  Kailroad  Co.,  134  I^  .S.  :{.'»1,  10  .Snp.  (M.  ."ViO. 

•-  Itarney  ?.  Uelrlclis,  138  U.  8.  52U,  533,  11  Suy.  Ct.  Hi. 


LEGAL    KFKKCTH    OK    DuMIflM'.  -1 

to  |M'rs()ii,il  csl.ilc,  bill  I  hey  iiiciiii  ;i  fix*M]  and  [(oriiianont  nlxKlf  or 
d\\«'llin^^  ]ila(<'  for  the  lime  bciii;,',  :is  dislin^^'iiislicd  from  a  in<M«*  \nu 
IKtiai y  locality  of  cxistciict'/''  Tlio  word  "iidiahilniK-y"  iinitlicK  a  inor<* 
lixrd  and  jHiinaiiciil  ahodr  than  tin-  word  ••residence."  and  freijuenil 
iinpoi'ts  many  pi i\  ilexes  and  duties  which  a  mef<'  resident  cannot  chiim 
or  be  subject  to.  and  Iho  transient  visit  of  a  person  for  a  time  at  a 
place  does  not  make  him  a  resident  while  then';  somethinn  more  \h 
necessary  to  eniiilc  him  to  that  characler.  There  must  be  a  settled, 
fixed  abode,  and  intention  to  remain  peinianently,  at  least  ff)r  a  time, 
for  business  or  other  purposes,  to  constitute  a  residence  within  the 
lejral  meanin^^  of  that  term.  It  is  a  settled  rule  that  a  jMison  may 
be  a  resident  in  one  state  and  liave  his  domicile  in  another. *' 

18.     LEGAL  EFFECTS  OF  DOMICILE. 

{a)  As  to  Personal  Cap<ic!t>j. 

The  question  as  to  what  law  governs  the  validity  of  contracts,  so 
far  as  concerns  the  personal  capacity  to  contract,  has  received  dilTerent 
answers,  and  in  some  particulars  is  involved  in  doubt.  T'nis  Dicey  •'* 
states  it  to  be  the  general  rule,  subject  to  specified  exceptions,  that 
a  pei-son's  capacity  to  enter  into  a  contract  is  governed  by  the  law 
of  his  domicile  at  the  time  of  making  the  contract;  while  Gray.  C.  J., 
in  Milliken  v.  Pratt." ^  treats  the  law  of  the  place  of  contract  as  usually 
controlling,  save  in  exceptional  case?.'*'  Thus,  the  cajiacity  of  an  in- 
fant to  contract  is  frequently  held  to  be  determined  by  the  lex  loci 
contractus.®^  In  Cooper  v.  Cooper."*  however,  it  is  said  that  whether 
the  capacity  of  a  minor  to  bind  himself  by  personal  contract  ought  t«» 
be  determined  by  the  law  of  his  domicile  or  by  the  lex  loci  contractus 
has  been  a  fertile  subject  of  controversy,  but   ilial  perhaps,  in  Eng- 

8  8  Wrigley's  Case.  4  Weml.  (N.  X^  f'O^.  S  Wend.  (N.  Y.)  l.'?4; 

so  Frost  V.  Brisbiii.  H(  Woud.  (N.  Y.j  11.  See  Tells  v.  Suell,  130  111.  379,  2.-] 
N.  E.  117. 

90  Conflict  of  haws,  543. 

81  12i5  Mass.   374. 

»2  Also,  Taylor  v.  Sharp,  108  N.  C.  377.  ?,S\.  13  S.  E.  138. 

»^  :Male  V.  Roberts,  3  Esp.  103;  Thonipsou  v.  Ketchuui.  S  .Tohns.  (N.  T.>  ISO: 
Baldwin  v.  Gray,  4  Mart.  N.  S.  (La.)  mz,  193;  Saul  v.  His  Creditors,  5  Mart 
N.  S.  (La.)  569,  597. 

0  4  13  App.  Cas.  SS,  108. 


Is  CONFLICT    OF    LAWS. 

l;ni(].  flio  qucslion  is  not  tiiuilly  scltlcd.  llion^ili  (ho  propondoraiico  of 
opinion  lluMc.  as  well  as  in  Aniciica.  sconis  lo  be  in  favor  of  llu'  law 
of  llu'  (loniicilc.''' 

So,  accordiu«j:  to  most  authorities,  the  capacity  of  a  luaiiicd  woman 
lo  contract  is  deteruiined  by  the  law,  not  of  the  domicile,  but  of  the 
contract.®®  Thus,  if  a  married  woman  domiciled  in  .Massachusetts 
si;;ns  a  nolo  there,  written  and  dated  at  a  place  in  Maine,  as  surety 
for  her  husband  (w  liich  by  tlie  laws  of  her  domicile  sIk^  cannot  do),  and 
mails  it  to  the  payee  in  Maine,  where  it  is  accepted  and  acted  on,  its 
validity  and  binding  efifect  upon  her  is  to  be  determined  by  the  law  of 
Maine." 

\Miere  a  married  woman,  a  resident  of  one  state,  enters  into  a 
contract  in  another  state,  to  take  etfect  in  that  state,  which,  thoujijh 
valid  there,  is  invalid  in  her  own  state,  and  the  latter  state  afterwards 
empowers  her  to  make  such  a  contract,  the  contract  may  be  there 
sued  upon.'-** 

Where  one  domiciled  in  one  state  subscribes  for  stock  of  a  national 
bank  of  another  state,  and  then  transfers  it  to  his  wife,  so  that,  by  the 
law  (tf  the  stat<'  of  their  domicile,  she  becomes  owner  tluMeof,  she  is 
sultject  to  a  stockholder's  liability,  under  Rev.  St.  U.  S.  §  .jir)2,  without 
rej,'ard  lo  the  laws  of  the  state  where  the  bank  is  relative  to  contracts 
by  married  women."®  The  capacity  of  a  husband  to  contract  with 
his  wife,  and  her  competency  to  receive  his  covenant,  are  determim'd 
l»y  llie  law  of  their  domieile.  even  in  resjtect  to  a  contract  by  him  to 
surrender  his  ri<,dits  in  laiuls  owned  in  another  state,  and  the  contract 
will  be  there  recojj;nized  and  enforced.'"" 

»5  Cooper  V.  Cooper,  Ki  A  pp.  Cas.  88,  lOS. 

un  Pearl  v.  HansborouKh.  1>  Ilnmpli.  (Tcim.)  ll'ti;  Millikcn  v.  Pratt,  125  Mass. 
."'.Tl.  (,'ontra,  Armstrong  v.  liost,  11*2  N.  C.  ")!),  ITS.  E.  14;  Freeman's  Api)pal, 
1J8  Conn.  TiS-i,  37  Atl.   lliO. 

«•'  Hell  V.  Packard,  GO  Me.  1<>.'.;  .■Nlillik.ii  v.  riaii.  VS^  .Mass.  .''.Tl;  Howies  v. 
Field.  78  Fed.  742;  Evans  v.  Hc.iver.  ."lO  oliio  Si.  I'.mi.  :;;;  N.  E.  MW.  See,  also, 
Baiini  V.  Hirchall,  1.".0  I'a.  St.  KM.  24  .Vti.  (;2o;  Kuliinson  v.  Queen,  87  Tenn. 
44.',  11  S.  \V.  ."'.8.      Contra.  Freeman's  Appeal,  C.S  Conn.  .'.;?;•..  :{7  Atl.  420. 

:•"  Case  V.  I)«)dj,'e,  18  U.  1.  CCl,  21)  .Ml.  TS.'i;  .Millikcn  v.  I'r.ilt,  VIT)  .Mass.  374, 
37f;. 

""  Kerr  V.  Urle,  Sd  .Md.  72.  37  All.  7S1». 

""•  Pol.«on  V.  Stewail.  107  .Mass.  211.  4."  N.  E.  7.''.7.  Hnt  the  rule  Is  other- 
wise as   lo  a   couvi'^uuce  of  laud.      Koss  v.   Koss,   12U  Mas.s.  243,  24G.      And 


LEGAL    EFFECTS    OF    DOM  KILE.  Z'J 

(b)  Domicile  of  Student. 

The  qiiostion  of  the  bearinji^  of  a  residence  acciiiiiefl  hv  a  student, 
in  connection  Avitli  llie  jinrsuit  of  his  studies  at  an  institution  of  learn 
ill};,  ujion  Iiis  d<»uiicile,  is  sometimes  regulated  by  statute.  It  may 
sonietinu'S  hajjpen,  wlien  a  student  leaves  his  |»revi(uis  place  of  abode, 
in  order  to  puisne  studies  at  such  an  institution,  he  does,  in  fact,  take 
up  a  pernuuient  residence  at  the  place  where  the  institution  is  located, 
with  the  intention  of  abandoning  his  previous  domicile  and  establish 
ing  a  new  one.  On  the  otlu-r  hand,  it  may  be  that  th(»  change  is  one 
of  residence  merely,  and  not  of  domicile.  Tiiis  distinction  is  recog- 
nized by  the  New  York  constitution,^"^  to  the  effect  that,  for  the  pur- 
l)ose  of  voting,  a  residence  cannot  be  gained  or  lost  by  reason  of 
jiresence  or  absence  while  a  student  of  any  seminary  of  learning.  Un- 
der that  provision  a  student  who  has  previously  been  domiciled  else- 
where does  not  acquire  a  new  residence  at  the  place  where  he  goes 
to  study,  unless  his  intent  to  change  his  domicile  is  manifested  by 
acts  other  than  his  mere  presence  as  a  student  in  his  new  place  of  resi- 
dence.^**^ 

(c)  Domicile  of  Coi'poration. 

A  corporation  always  has  a  domicile  in  the  state  or  country  in 
which  it  is  incorporated.  As  to  whether  it  may  also  have  a  domicile 
elsewhere,  the  authorities  differ.^*^^ 

(d )  Ihin (die  of  Infa n t. 

An  infant  has,  during  his  minority,  the  same  domicile  as  his  father.^"* 
An  illegitimate  cliild  has  the  domicile  of  his  mother;  ^°^  but  if  an 
illegitiuuite  child  is  afterwards  legitimated,  according  to  the  law  of 
the  parents'  domicile,  by  their  subsequent  marriag^e,  while  he  cannot 
in  consequence  inherit  land,  by  intestacy,  in  a  country  where  such  an 

ovi'ii  :is  to  cou tracts  to  oouvej'.      See  Cocliiau  v.  Bciitou,  12H  liiil.  ."»,s.  25  N.  E. 
87U:   J)()yle  v.  McCiuiie.  38  Iowa,  410;   Sell  v.  Miller,  11  Ohio  St.  ool. 

1 0 1  Article  2,  §  3. 

102  lu  i-e  Garvey,  147  N.  Y.  117,  41  X.  E.  439. 

lof  lu  the  affirmative,  National  Fire  Ins.  Co.  v.  Chanihers,  .")3  X.  .7.  Eq.  4GS. 
494.  32  Atl.  tUj3.  In  the  negative.  Douglass  v.  Insurance  Co.,  13S  N.  Y.  20'.». 
33  N.  E.  038. 

104  In  re  Macreight.  30  Ch.  I>iv.  Km. 

lor.  In  re  Beaumont  [1893J  3  Ch.  490;  Kjall  v.  Kennedy,  40  N.  Y.  Sui)er.  Ct. 
347,  3(il. 


24  CONFLICT    OF    LAWS. 

effect  is  not  given  to  a  subsequent  marriage,  ho  may  nevertheless  be 
entitled  to  take  it  as  a  "child"  of  the  parent,  under  a  devise  to  his 
"children.''  ^"'^  But  in  New  York  the  subsequent  remarriage  of  the 
parents,  which  according  to  the  law  of  their  domicile  would  legitimate 
the  child,  renders  him  legitimate  in  New  York  for  all  purposes,  in- 
cluding the  right  to  inherit.  ^"'^ 

(e)  Domicile  of  a  Married  Woman. 

A  married  woman  is  domiciled  where  the  husband  has  his  domicile, 
even  though  she  may  be  in  fact  residing  in  another  place,  and  even 
though  she  is  living  apart  from  her  husband,  if  without  sufficient 
cause.^°®  This  rule  is  founded  upon  the  theoretical  identity  of  per- 
son and  of  interest  between  husband  and  wife,  as  established  by  law, 
and  the  presumption  that,  from  the  nature  of  that  relation  the  home  of 
the  one  is  that  of  the  other;  and  is  intended  to  promote,  strengthen, 
and  secure  their  interests  in  this  relation,  as  it  ordinarily  exists,  where 
unity  and  harmony  prevail.  But  the  law  will  recognize  a  wife  as  hav- 
ing a  separate  existence,  and  separate  interests  and  separate  rights, 
in  those  cases  where  the  express  object  of  legal  proceedings  is  to  show 
that  the  relation  itself  ought  to  be  dissolved  for  the  husband's  fault,  or 
so  modified  as  to  establish  separate  interests.^*" 

(f)  Change  of  Domicile. 

The  act  which,  if  coupled  with  a  due  intent,  may  suffice  to  constitute 
a  change  of  domicile,  may  be  any  act  whatever  which  in  its  nature 
may,  in  a  given  case,  bear  out  the  claim  of  a  change;  but  it  must,  in 
effect,  be  an  actual  change  of  residence.^^" 

(g)  Situs  of  a  Debt.  • 

The  general  rule  is  settled  that  the  situs  of  debts  and  obligations 
is  at  the  domicile  of  the  creditor.     But  the  attachment  laws  of  New 

100  Biilwhi.stle  v.  Vardill,  2  Clark  &  F.  .j71,  7  Clark  &  F.  SDr,;  In  re  Groy's 
Trusts  [1802]  3  Ch.  88. 

107  Miller  V.  Miller.  91  N.  Y.  31o.      See  Laws  N.  Y.  18!)(J.  c.  272.  §  18. 

108  Cheely  v.  Clayton,  110  U.  S,  701,  705,  4  Sup.  Ct.  o28;  Auderson  v.  Watt, 
138  U.  S.  (;')4,  700,  11  Sup.  Ct.  449. 

108  Ilarteau  v.  Ilarteau,  14  Tick.  (Mass.)  181.  1.S5;  Burtis  v.  Burtis,  101  Mass. 
508,  37  X.  E.  740;    Anderson  v.  Watt,  138  U.  S.  604,  706,  11  Sup.  Ct.  449. 

110  Mitchell  V.  U.  S..  21  Wall.  350;  Brown  v.  Butler.  87  Va.  621,  13  S.  E.  71; 
Dicey,  Coufl.  Laws.  105-119;  Chaml)ers  v.  Prince,  75  Fed.  170;  McMullen  v. 
Wadswortb,  14  App.  Cas.  031,  030. 


LEGAL    EFFECTS    OF    DOMICILE.  20 

York  and  of  other  states  recognize  the  right  of  a  creditor  of  a  non- 
resident to  attach  tlic  debt  or  credit,  owin^-  or  due  to  him,  from  a 
person  within  the  jurisdiction  where  the  attachment  issues,  and  to 
this  extent  the  principle  has  been  sanctioned  that  the  laws  of  the 
state,  for  the  purposes  of  attachment  proceedings,  may  fix  the  situs 
of  a  debt  at  the  domicile  of  the  debtor.  It  is  at  least  doubtful  whether 
this  qualification  of  the  general  rule  applies  to  negotiable  instruments, 
or  other  written  obligations  of  a  resident  debtor,  held  by  and  in  the 
possession  of  his  nonresident  creditor.^ ^^ 

(h)  As  to  Marriage. 

The  domicile  of  parties  to  a  marriage  contract,  entered  into  in  an- 
other jurisdiction,  does  not  control  its  validity,  which  depends  in  gen- 
eral on  the  law  of  the  place  where  it  was  contracted.^ ^^ 

(i)  As  to  Divorce. 

The  bearing  of  the  question  of  domicile  upon  the  validity  of  a  divorce 
has  been  elsewhere  discussed.  But  a  general  discussion  of  the  sub- 
ject may  be  found  also  in  Thompson  v.  Waters,^ ^^  Knowlton  v.  Knowl- 
ton,^^*  Flower  v.  Flower,^^^  and  Anthony  v.  Rice,^^®  which  should  be 
read  in  connection  with  those  cited  under  "Foreign  Divorce."  ^^'^ 

(j)  As  to  ^Yills. 

The  law  of  a  testator's  domicile  controls  as  to  the  formal  requisites 
of  the  validity  of  a  will  of  personal  property,  the  capacity  of  the 
testator,  and  the  construction  of  the  instrument.  But  a  will  of  real 
property  must  be  executed  in  compliance  with  the  law  of  the  place 
where  the  land  lies.  And  if  a  will  contains  a  particular  bequest  of 
funds,  to  be  transmitted  to  and  administered  for  particular  purposes 
in  another  state,  the  validity  of  the  bequest  must  be  tested  by  the 
law  of  the  latter  state.^^* 

Ill  Douglass  V.  Insurance  Co.,  138  N.  Y.  209,  219,  33  N.  E.  938.  See 
National  Fire  Ins.  Co.  v.  Chambers,  53  N.  J.  Bq.  468,  32  Atl.  663. 

iisMilliken  v.  Pratt,  125  Mass.  374,  380.  See  post,  p.  42,  "Foreign  Mar- 
riages." 

113  25  Mich.  247. 

114  155  111.  158,  39  N.  E.  595. 

115  42  N.  J.  Eq.  152,  7  Atl.  669. 
lie  110  Mo.  223,  19  S.  W.  423. 
iiT  Post,  p.  43. 

lis  Sickles  v.  City  of  New  Orleans,  26  C.  C.  A.  204,  80  Fed.  SG8;   Chamber- 


2G  CONFLICT    OF    LAWS. 

The  validity  of  the  execution  of  a  testamentary  power  of  disposi- 
tioD  of  personal  property  depends  on  the  law  of  the  domicile,  not  of  the 
donee,  but  of  the  testator,— the  donor  of  the  itower.^^**  The  distribu- 
tion of  a  decedent's  personal  estate  is  y,overn('d  by  the  law  of  the 
testator's  domicile.^ ^" 

(k)  As  to  Ge7ieral  Assignments  for  Creditors. 

The  general  rule  that  the  validity  of  a  transfer  of  personal  property 
is  governed  by  the  law  of  the  domicile  of  the  owner  is  in  most  juris- 
dictions held  to  apply  to  a  transfer  by  Aoluntary  assignment  by  a 
debtor  of  all  his  property  for  the  benefit  of  his  creditors,  as  well  as 
to  a  specific  transfer  by  way  of  ordinary  sale  or  contract,  and  the 
title  of  such  assignee,  valid  by  the  law  of  the  domicile,  will  prevail 
against  the  lien  of  an  attachment  issued  and  levied  in  another  state 
or  country  subsequent  to  the  assignment,  in  favor  of  a  creditor  there, 
whether  a  citizen  or  a  nonresident,  upon  a  debt  or  chattel  belonging 
to  the  assignor,  embraced  in  the  assignment,  provided  the  recognition 
of  the  title  under  the  assignment  would  not  contravene  the  statutory 
law  of  the  state  or  be  repugnant  to  its  public  policy.  This  is  the 
general,  though  not  the  universal,  rule,  supported  by  the  preponder- 
ating weight  of  authority,  and  is  the  settled  law  of  New  York.^-^ 

But  this  general  rule  is  subject  to  a  qualification,  established  in  the 
jurisprudence  of  the  American  states,  that  a  title  to  personal  prop- 
erty acquired  in  invitum  under  foreign  insolvent  or  bankrupt  laws, 
though  good  according  to  the  law  of  the  state  where  the  proceedings 

laiu  V.  Chamberlain,  43  N.  Y.  431;  Jones  v.  Halier.sliam,  107  U.  S.  179,  2  Sup. 
Ct.  33U;  Dammert  v.  Osl)()in.  140  N.  Y.  :!0.  85  N.  E.  407;  Id.,  141  N.  Y.  otxi.  35 
N.  E.  1088. 

ii»  Cottinp  V.  De  Sartiues.  17  11.  I.  tifhS.  24  Atl.  530. 

120  Jenkins  v.  Safe-Deposit  Co.,  53  N.  J.  Eq.  194,  32  Atl.  208;  Bruce  v.  Bruce, 
6  Brown,  Pari.  Cas.  50f>;  Doglioni  v.  Crispin,  L.  R.  1  H.  L.  301.  As  to  the  rule 
in  testamentarj-  provisions  creating  perpetuities,  or  effecting  a  suspension  of 
the  power  of  alienation,  see  Whitney  v.  Dodge,  105  Cal.  192.  .38  Pac.  («G;  Cross 
V.  Trust  Co.,  131  N.  Y.  330,  ;i(l  N.  E.  125. 

iziBartli  V.  Backus,  140  N.  Y.  2.3o.  2:'.l.  ;;5  \.  K.  125;  Ockerman  v.  Cros.s, 
.54  N.  Y.  21>;  Speed  v.  May,  17  Pa.  St.  91;  Forbes  v.  Scannell.  13  Cal.  242.  See 
Train  v.  Kendall,  137  Mass.  3f}G;  Pierce  v.  O'Brien,  129  Mass.  314;  Van  Winkle 
V.  Armstrong.  41  N.  .1.  Eq.  402,  5  Atl.  449;  Beutley  v.  Whittemore,  19  N.  J.  Eq. 
4G2:  Consniidatcd  Tank-Line  Co.  v.  Collier.  148  111.  2.59.  .".5  X.  E.  756.  See 
Dearing  v.  llardware  Co.,  33  App.  Div.  31,  53  N.  Y.  Supp-  313. 


LKX    FORI. 


27 


were  takeu,  will  uot  be  ret'Oj,aii/.('<l  in  anonicr  slate  where  it  comes 
in  conflict  with  the  rights  of  creditors  pursuing  their  remedy  there 
against  the  property  of  the  debtor.^--  And  some  states  refuse  to 
recognize  the  validity  of  the  title  of  a  foreign  assignee,  even  in  case 
of  voluntary  assignments,  where  it  comes  in  conflict  with  the  claims 
of  domestic  creditors.^ -^  But  New  York,  while  i-ecognizing  the  full 
validity  of  such  assignments,  makes  no  such  distinrtion  between 
foreign  and  domestic  creditors,  in  case  of  an  involuntary  transfer.^-* 
And  the  same  rule  applies  in  some  other  states/" 

19.     LEX  FORI. 

^Miatever  relates  merely  to  the  remedy,  and  constitutes  part  of 
the  procedure,  is  determined  by  the  law  of  the  forum,  for  matters  of 
process  must  be  uniform  in  the  courts  of  the  same  country;  but 
whatever  goes  to  the  substance  of  the  obligation,  and  affects  the  rights 
of  the  parties,  as  growing  out  of  the  contract  itself,  and  inhering  in. 
or  attaching  to  it,  is  governed  by  the  law  of  the  contract.  And,  still 
further,  wherever  any  matter  is  not,  according  to  settled  principles,  to 
be  decided  in  accordance  with  the  law  of  any  other  place,  it  must  be 
settled  by  the  law  of  the  forum. ^■-'"' 

Thus,  whether  an  assignee  of  a  chose  in  action  shall  sue  in  his  own 
name,  or  that  of  his  assignor,  is  a  technical  question  of  mere  process, 
and  determinable  by  the  law  of  the  forum;  ^2'  but  whether  the  for- 
eign assignment  on  which  the  plaintiff  claims  is  valid  at  all,  or  whether 
valid  against  the  defendant,  goes  to  the  merits,  and  must  be  decided 
by  the  law  of  the  place  in  which  the  case  has  its  legal  seat.  And  the 
same  claim  may  sometimes  be  a  mere  matter  of  process,  and  so  de- 
terminable by  the  law  of  the  forum,  and  sometimes  a  matter  of  sub- 
stance, going  to  the  merits,  and  therefore  determinable  by  the  law  of 
the  contract.  Thus,  in  the  courts  of  America,  the  defense  of  the  stat- 
ic 2  Holmes  v.  Remsen,  20  .Tohns.  (X.  Y.)  229;  Barth  v.  Backus,  140  N.  Y.  2^0, 
235,  35  N.  E.  425. 

123  May  v.  Wanneinacher,  111  Mass.  202;  Moore  v.  Bonnell.  31  X.  J.  T.aw,  90. 

124  Bai-th  V.  Backus,  140  X.  Y.  230,  239,  35  N.  E.  425. 

12  5  McClui-e  V.  Campbell,  71  Wis.  350,  37  N.  W.  343;  Boston  Iiuu  Co.  v. 
Boston  Locomotive  Works.  51  Me.  585. 

126  Pritchard  v.  Xortou,  106  U.  S.  124,  129,  1  Sup.  Ct.  102. 

127  Id.     But  see  Lower  v.  Segal  59  X.  J.  Law,  60,  34  Atl.  945. 


28  CONFLICT    OF    I.A\V.S. 

ulc  of  limitations  is  j^ovcnicd  by  ilic  law  of  the  fonini.  as  liriii";-  a  mat- 
ter of  mere  procedure,  while  in  Continental  Europe  the  defense  of  pre- 
sciiption  is  refjarded  as  jioinii-  to  the  substance  of  the  contract,  and 
thcicfore  is  jjoverned  by  the  law  of  the  seat  of  the  oblij^ation;  and  it 
has  been  held  that,  when  such  a  case  arises  in  an  American  court,  in 
reference  to  a  claim  thus  absolutely  extinguished  and  nullified  by  the 
forcijxn  law,  the  same  restilt,  in  the  absence  of  any  special  considera- 
tions depending,'  on  absence  from  the  state,  etc.,  will  follow  here,  and 
the  claim  will  be  regarded  as  not  only  barred,  but  as  void.'-^ 

The  princijtle  that  what  is  apparently  a  mere  matter  of  remedy  in 
some  circumstances  becomes  in  others,  where  it  attaches  to  the  sub- 
stance of  the  controversy,  a  matter  of  right,  is  familiar  in  the  applica- 
tion of  the  constitutional  provision  prohibiting  the  passing  by  a  state 
of  any  law  imiiairing  the  obligation  of  contracts;  for  any  law  which 
in  its  operation  amounts  to  a  denial  or  obstruction  of  the  rights 
accruing  by  a  contract,  though  professing  to  act  only  on  the  remedy, 
is  directly  obnoxious  to  the  prohibition  of  the  constitution.^-" 

The  law  of  the  forum  determines  the  form  of  the  action,  as,  whether 
it  shall  be  assumpsit,  covenant,  or  debt.^=^°  It  regulates  all  process, 
both  mesne  and  final. ^^^  It  may  also  admit,  as  a  part  of  its  domestic 
procedure,  a  set-olf  or  counterclaim  of  distinct  causes  of  action,  be- 
tween parties  to  the  suit,  though  not  admissible  by  the  law  of  the 
place  of  the  contract.'^-  The  rules  of  evidence  are  also  applied  by 
the  law  of  the  forum.^^^  Thus,  a  contract,  valid  by  the  law  of  the 
place  where  it  was  made,  although  not  in  writing,  will  not  be  en- 
forccHl  in  the  courts  of  a  country  where  the  statute  of  frauds  prevails, 
unless  it  is  put  in  writing.^^* 

Where  the  law  of  the  forum  and  that  of  the  place  of  the  execution 
of  the  contract  coincide,  it  will  be  enforced,  although  required  to  be  in 
writing  by  the  law  of  the  place  of  performance,  as  was  the  case  of  Scud- 

128  Prltchard  v.  Norton,  ICKJ  U.  S.  124,  131.  1  Sup.  Ct.  1<^2. 

120  McCrackon  v.  Ilayward.  2  How.  608.  612. 

180  Warron  v.  Lynch,  5  .Johns.  (N.  Y.)  2:«);   Adam  v.  Kerr,  1  Bos.  &  P.  oGO. 

iti  O^'di-n  V.  Saumlers,  12  Wheat.  213. 

182  (;ibl».s  V.  Howard,  2  N.  II.  2fH;;    Rupglos  v.  Kooler,  3  .Tohns.  (N.  Y.)  20.3. 

188  Wilcox  V.  Hunt,  13  Pet.  .378:  I'.alii  v.  Hailroad  r^x,  3  II.  L.  Cns.  1;  Ilo.idloy 
V.  Transportation  Co.,  115  Mass.  304;  (proof  of  prutt'sU  Curbiu  v.  Bank,  87  Va. 
G61.  13  S.  E.  98. 

184  Leroux  v.  I'.rown,  12  C.  B.  8<>1. 


LEX    FORI.  2 'J 

der  V.  Bank,  "''  l)ccause  the  fo)'m  of  the  contract  is  rcj^ulatcd  1»>  llio 
law  of  the  place  of  its  cehltiation,  and  the  evidence  of  it  by  Ihat  of 
the  forum.  This  principle  does  not  apply  to  a  parol  contract  for  the 
sale  of  land  in  another  state,  executed  in  that  state,  where  an  action 
is  brought  to  enforce  it  in  another  state;  for,  in  the  absence  of  any 
proof  that  the  laws  of  the  state  where  it  was  executed  require  such 
contracts  to  be  in  writing,  it  is  enforced,  even  though  it  would  be  in- 
valid if  orally  executed  in  the  state  in  which  suit  is  brought.^ ^® 

But  the  question  of  consideration,  whether  arising  upon  the  admis- 
sibility of  evidence  or  presented  as  a  point  in  pleading,  is  not  one 
of  procedure  and  remedy.  It  goes  to  the  substance  of  the  right  itself, 
and  applies  to  the  constitution  of  the  contract."^  Where  a  mort- 
gagee has  acquired,  by  the  law  of  the  state  where  the  mortgaged  land 
is  situated,  a  right  to  enforce,  against  a  grantee  of  the  mortgagor,  his 
agreement  to  assume  and  pay  the  mortgage  debt,  yet  the  form  of  his 
remedy,  whether  it  must  be  in  covenant  or  in  assumpsit,  at  law  or  in 
equity,  is  governed  by  the  law  of  the  place  where  the  action  is 
brought.^  ^^ 

The  statutes  of  another  state  have  of  course  no  extraterritorial 
force,  but  rights  acquired  under  them  will  always  in  comity  be  en- 
forced, if  not  against  the  public  policy  of  the  laws  of  the  state  where 
the  action  is  brought.  In  such  cases  the  law  of  the  place  where  the 
right  was  acquired  or  the  liability  was  incurred  will  govern  as  to 
the  right  of  action,  while  all  that  pertains  merely  to  the  remedy  will 
be  controlled  by  the  law  of  the  state  where  the  action  is  brought.  And 
the  principle  is  the  same  whether  the  right  of  action  be  ex  contractu 
or  ex  delicto.  Thus,  in  an  action  to  recover  damages  for  deatli 
caused  by  the  defendant's  negligence,  where  the  death  occurred  in 
Montana  and  the  action  was  brought  in  Minnesota,  it  appeared  that, 
when  the  death  occurred,  the  limit  of  recovery  under  the  laws  of 
Minnesota  was  $5,000,  but  at  the  time  of  the  trial  of  the  case  the 
limit  had  been  increased  to  |10,000,  while,  under  the  laws  of  Montana, 

135  91  U.  S.  406. 

13  6  Miller  v.  Wilson,  146  111.  523,  34  N.  E.  1111.  See  Bearing  v.  Hardware 
Co.,  33  App.  Div.  31,  53  N.  Y.  Supp.  513;  Poison  v.  Stowait,  IGT  Mass.  211, 
45  N.  E.  737;    Cochran  v.  Benton,  126  Ind.  58,  25  N.  E.  870. 

13  7  Pritchard  v.  Norton,  106  U.  S,  1^4,  135,  1  Sup.  Ct  102. 

138  Willard  v.  Wood,  135  U.  S.  309,  10  Sup.  Ct.  S31. 


30 


CONFI.KT    OK    LAWS. 


the  n'Cdvorv  \v;is  liiuilcd  to  sm  li  ;ni  ;imi»iiiil  ;is  (lie  jiiiv  mi;:lil  tliiiik 
jiiojuT  iimltT  Jill  llu' <-inniustaiU('s.  Tlun-  \\;is;i  vcrdirl  for  f IO.(H»0. 
It  was  held  thai  tlir  ri;rlit  to  ircoxcrv.  ami  llu-  liinif  of  icntxci'v,  wire 
L'i>\rnnMl  \)\  llif  lex  loci.  aiHJ  M(»t  liv  iln-  li\  fori.'"' 

It  is  a  |)iinri|i!f  of  iinivtisal  ajipliral  ion.  rcco;xi»i'/«<l  in  iiH  civili/fd 
statos.  that  llio  slalJiIcs  of  one  stale  lia\('.  ox  |iro|»iio  \  ijioro.  no  foico 
or  ctTcil  in  anotlirr.  Tlio  cnfonfincnt  of  sn<li  a  law  d«'|M'nds  on 
lilt'  oxpiTss  or  tacit  consent  of  ilic  latter  state  hy  virtm-  of  t  lie  adoption 
of  the  docti-ine  of  coniitv, — a  do(  trine  which  has  many  limitalioiis 
and  i|nalithaiions.'*" 

It  is  a  well  settled  rule,  founded  on  reason  and  aulhorily.  that  the 
lex  f<iri  furnishi's  in  all  cases,  prima  facie.  iIh'  rule  of  decision,  ami 
if  either  party  wishes  (he  Itenetit  of  a  dilVeieni  i  nle  oi'  law. — as.  for 
instance,  the  lex  domicilii,  lex  loci  contractus,  or  lex  loci  rei  sita*. — 
he  nnisl  aver  and  prove  it.  The  conrls  of  a  count ry  are  piesniniod  to 
he  accpniinted  oidy  with  their  own  laws;  those  of  othei'  countries  are 
to  he  av<'rred  and  proved  like  other  fads  (tf  which  coiiris  do  not  lake 
notice.'*' 

It  is  eipi.illy  well  seiiled  that  the  several  slates  of  the  I'nion  are 
t<»  he  considered  in  this  resj>e<-t  as  forei^ni  to  each  oilier,  and  that  the 
courts  of  one  stale  are  not  presimied  to  know,  and  therefore  not 
lioiiiid  to  take  judicial  notice  of.  the  laws  of  another  state. '*- 

The  <ouri>  of  the  I'nited  States  take  notice,  withoiil  |»roof.  of  the 
laws  of  each  of  the  Inited  States,  when  exercisin.ij;  an  ori;:inal  jnris- 
dicti»»n.  When  tin*  federal  siipi-eine  court  exercises  an  ajipellate  juris- 
diction from  a  lower  court  of  i  he  I  niied  States,  it  lakes  jmlicial  notice 
of  the  laws  of  every  slate  of  the  Inion.  Itecjiiise  those  law  s  aic  know  n 
to  the  conrt  Itelow  as  laws  needing:  no  a\eini<nt  or  |iidof;  Inil  on  a 
writ  of  erroi'  to  the  hi;,diest  court  of  a  >lale.  while  ilii-  l;iw  of  that 
state,  hein;.;  known  to  its  courts  as  law.  is  of  course  wilhiii  (lie  judicial 
notice  of  the  supreme  court   at    the  hejiriiiL:   tui  error.  ,\ei.  as  in   the 


>»»NorlluTn  Vm-.  U.  Co.  v.  ItnlxixU.  l.M  \'.  S.  I'.mi.  It  Snji  Ci.  iiTS.  ("em- 
pan-  \V<M.<|«-n  V.  KjiliriiiKi  (n..  Ijr,  N.  v.  in.  ic,  17.  .:*:  S.  ll.  lo.'.o,  DiiiiiicU  v. 
Hailniiid  <o..  lo.''.  V.  S.   11. 

»««  MnrHlinll  v.  .kImtmijiii.  14S  N.  V.  1».  'j:,.  Ill  .\.  K.  Hit 

>*'  Monrw  V.  DoiikIjihh,  ■''i  N.  V.  i'C:  I.nili.iin  v.  I>i'  l.disrllf.  .".  .Xpji.  Div.  .'I'J.'i. 
:\H  N.  Y.  Siipp.  L'7o:  iMivlHon  v.  <:iimoii.  .'.  c  c  A.  .".1.!.  .'.<;  I'r.j.  h;;. 

»«2  lliinlc.v  V.  I>()iiok1iii«',  110  L",  S.  1,  «,  r,  S\\\>    Ci.  IT.'. 


LKX    lOUI.  '51 

sl;ilc  (Mdiii  tli<-  laws  of  Miiutlicr  slair  arc  Init  finis  r<M|iiii  in;:  to  lie 
pi'oNcd  ill  order  to  1m-  consiiicri'ii.  tlic  siipifiiK-  loiiii  doi-s  not  tnkc 
Jiidiciiil  iiotii-c  of  tliciM,  iiiih'ss  made  part  of  tlw  i-<'(-()rd  Kent  up.  imh'HH 
l»v  I  lie  local  law  of  a  slali'  Uh  hijihcHt  court  dooK  take  judicial  notice 
of  th<'  laws  of  oilier  slatcH.'*'' 

The  principN'  that,  in  the  absence  of  proof  of  dilTerent  laws  exislin-^ 
in  the  place  where  a  conti-act  was  made,  or  wheic  transiiclicms  ii» 
volved  (Kciiired.  the  com  I  in  which  an  ailinn  is  |ien(hii;i  will  proceed 
accordiiij;  to  its  own  laws.  ap|»lies.  noi  lo  its  statute  laws,  hut  to  the 
coininon  law;'^'  for  it  presumes,  in  the  absence  of  proof,  th.il  the 
c'omiiKMi  law  i»re\ails  in  other  states  settled  \ty  Knjilish  colonists,  and 
if  the  paitv  wishes  to  prove  the  conlraiy.  or  to  rest  his  ri^^hts  upon 
some  statute  of  anolhei-  state,  he  must  i»rodiice  proof  in  sn[»port 
of  his  position. ^^'  Iltit  this  piinciple  does  not  a|t|)ly.  for  example,  to 
Russia,  or  the  Indian  Tei  t  itor\ .  or  the  ( 'reek  Nation.'*"  In  such  cases, 
in  the  absence  of  proof  of  the  foreign  law.  the  law  of  the  forum  pi 
vails.'*' 

Sfftfi/fr  tif  L'un'ildi'inns. 

The  limitaiioii  of  actions  is  j^oNcrned  by  the  h'X  fori,  and  is  con 
trolled  by  the  lej;isla tares  of  the  se\cral  states  in  wiii(  h  the  action 
is  brou<;ht,  as  eoustrncd  by  the  highest  court  of  that  stale,  even  though 
the  judicial  construction  dilTei-s  fi'om  that  |irevailing  in  other  juris 
dicticuis.' ''*  subject  to  the  qualiticaiion  that  the  state  in  <|uestion  can- 
not by  its  statute  make  any  disciimination  against  the  citizens,  the 
contracts,  or  the  judgments  of  other  states,  or  against  any  riglii 
asserteil  under  the  constitution  or  laws  of  the  United  States.^*" 

K-!  llaiilcy  V.  l>i)iin^'liuc.  lit;  I'.  S.  1,  <;.  (i  Slip.  Ci.  'IVl. 

n<  Kollcy  V.  Kelley,  IGl  Mass.  111.  'MS  N.  E.  s;;7:    Wain  v.  Walii.  -.•',  N.  .T. 
Law,  42J».  Tl  Atl.  2<>:5. 

145  Wooden  V.  Kaihoail  Co.,  Ilm;  N.  Y.  10.  l'c,  N.  K.  liC.O;    CIkim-  v.  Insiiran 
Co..  01  Mass.  ;;n :    National  Hank  of  Michigan  v.  <Irccn.  li."!  Iowa.  140;    Mohr 
V.  Mieseu.  47  Minn.  'I'lS.  45>  N.  W.  Stl'J. 

1*6  Davison  v.  Gibson,  5  C.  C.  A.  ."^4.;.  ."kJ  Fed.  44.'.. 

1*"  Davison  v.  Gib.son.  supra. 

1*8  Great  Western  Tel.  Co.  v.   riir.ly.   lt;j  I'.  S.  .-^29.  339,  16  Sup.  Ct  810; 
Munos  V.  Southern  Pac.  Co..  2  C.  C  A.  Hk!.  o\  Fed.  188. 

1*9  Christmas  v.  Kussell,  5  Wall.  1.1)0. 


0-:  CONKI.ICT   OF    LAWS. 

20.     LEX   LOCI  ACTUS. 

"Anotlior  law  offi'ii  invoked  is  llic  ir.\  loci  ;i«ins.  ili;it  of  tlio 
I'lac*'  when'  tlu'  iii.'^tnimcnt  was  oxcvntcd  or  where  jndiiial  pioceed- 
in<:s  have  been  had."  '""  The  h'X  hxi  actus  ^'oxciiis  the  forms  of  in- 
struments, and  the  validity  of  foici^Mi  jiKlicial  jiroceediugs.'*^ 

21.     ACTIONS  ON  JUDGMENTS. 

\Miere  a  judi^nient  is  procured  bv  one  litigant  against  another,  it  is, 
of  course,  enforceable  as  such,  by  process,  only  within  the  nation  or 
stat<'  in  which  it  was  rendered.  If,  for  exaini)le.  a  jndgtnent  is  ren- 
dered in  New  Jersey,  execution  cannot  be  levied  under  it  in  Pennsyl- 
vania; if  it  is  rendered  in  the  federal  circuit  court  for  the  Southern 
district  of  New  York,  execution  cannot  be  levied  in  the  federal  dis- 
trict of  Khode  Island;  if  it  is  rendered  in  England.  executi(>n  cannot 
be  levie<l  in  the  United  States.  In  any  case  in  which  it  is  desired  to 
reach  property  situated  in  a  jurisdiction  other  than  that  in  which  the 
judgment  is  rendered,  and  subject  it  to  satisfaction  of  the  judgment, 
it  is  necessary,  in  order  to  utilize  the  judgment,  to  bring  a  new  action 
upon  it  in  the  latter  jurisdiction.  Sometimes,  also,  a  party  seeks  to 
utilize  the  judgment  of  another  jurisdiction,  not  as  the  basis  of  a  new 
action,  but  by  way  of  defense,  or  as  evidence  in  an  action.  As  the 
prin<ipl(S  in  accordance  with  which  the  |iermissibility  of  such  use 
of  a  foreign  judgment  are  deirniiincd  dillVr  in  some  respects,  accord- 
ing as  the  two  different  jurisdictioijs  involved  are,  on  the  one  hand, 
nations,  or  a  nation  and  a  state  of  the  Union,  or  are,  on  the  other 
hand,  both  states  of  the  Union,  these  two  situations  will  be  considered 
sejtarately.  In  buth  cases,  tlie  judgment,  of  whatever  nature,  in 
onler  to  be  eiitith-d  to  any  elTect,  must  have  been  rendered  by  a  court 
liaving  jurisdiction  of  the  cause,  and  upon  regular  proieedings  and 
due  notice."*' 

(1)  As  between  NatumA^  or  a  Nation  <ii,tl  it  Sf,iff\ 

(a)  A  juflgment  in  rem,  adjudicating  the  title  to  a  ship  or  other 
movable  proi»erfy  within  the  custody  of  the  court,  is  treated  as  valid 

ito  WcKtl.  I'rlv.  Int.  Lnw,  j).  0, 

«6«  I«l.  p.  0. 

«£^J  Hilinii  V.  f;uy<.t.  VA)  v.  s.  11.''..  ir,<;.  ir,  Slip.  ft.  i:!i). 


ACTIONS    ON    JUDGMKNT8.  '3 

«'vriy\\lM'i<'.  'I'lic  most  coimiion  illiistialioiiK  of  lliis  mtc  (IrTifcs  of 
(  onrls  (if  ;Hliiiii;ilty  ;ni(l  pii/,e,  which  proccf'd  upon  priiiciph-H  of  inter 
iwttidiial  l:i\\  :  Imii  iIk-  sitiiic  rule  a))pli('S  to  jn<i;;iiiciitM  in  i<-tii  iiikIm 
MHliii(i|t;il  l:i\\.''' 

(b)  So.  also,  where  the  matter  in  controvers.v  is  land  or  other  immov- 
able property,  a  jmlj;Mient  pronounced  in  the  fornm  rei  sita*  is  luld 
to  be  of  universal  obli^'alion.  as  to  all  matters  of  ri^dit  and  title  whi.li 
it  professes  to  deciiie  in  relation  ilieicto.  and  is  absolnlely  con<hi 
sive.^^'-' 

(c~l  A  jii(l;zni(iit  alViM  lin^  the  stains  of  iicisniis.  sudi  as  a  <lecr<*e 
contirniin;^  or  dissolving,'  a  mania^c  is  i('ro;:iii/.rd  as  \alid  in  every 
country,  unless  contrary  to  the  jiolicy  of  its  own  laws.'"'^ 

(d)  Otlier  judgments,  not  strictly  in  rem.  under  which  a  person  has 
been  comjHlled  to  pay  money,  are  so  far  conclusive  that  the  justice 
of  the  payment  cannot  be  impeached  in  another  country,  so  as  to 
<ompel  him  to  pay  it  a^ain.  For  instance,  a  judjjment  in  foreifjn  at- 
tacliraent  is  conclusive,  as  between  the  parties,  of  the  ri<j;ht  to  the 
property  or  money  attached;  and  if.  on  the  dissohition  of  a  jiartner- 
ship,  one  partner  promises  to  indemnify  the  other  aj^ainst  tlie  debts 
of  the  partnership,  a  judpnent  for  such  a  debt,  under  which  the  latter 
has  been  compelled  to  pay  it,  is  conchisive  evidence  of  the  debt,  in 
a  suit  by  him  to  recover  the  amount  upon  the  promise  of  indemnity.''" 
Otlier  foreipi  judfrments  which  have  been  held  conclusive  of  the 
matter  adjudged  were  judgments  dischai-ging  obligations  contracted 
in  the  foreign  country,  between  citizens  or  residents  thereof. ^'^ 

183  Hilton  v.  Guyot.  l.VJ  U.  S.  113.  IGT,  IG  Sup.  Ct.  13lt:  Williams  v.  Armroyd. 
7  Cranch,  423,  432;  Croudson  v.  Leonard,  4  Cranch.  434:  Hudson  v.  Guestier, 
Id.  293;  Scott  v.  McNcal,  154  U.  S.  34.  4(5,  14  Sup.  Ct.  1108;  Castrique  v.  Iniri.  . 
L.  R.  4  n.  L.  414;   Ludlow  v.  Dale.  1  Jobus.  Cas.  (N.  Y.)  IG. 

154  Monroe  v.  Douglas,  4  Saudf.  Ch.  (N.  Y.)  12(J.  179. 

IBB  Hilton  v.  Ouyot.  ir.9  U.  S.  113.  167,  H>  Sup.  Ct.  13"J;  Cottington's  Cast'. 
2  Swanst.  32(;;  Roach  v.  Garvan,  1  Ves.  Sr.  157;  Harvey  v.  Farnle.  8  App.  Ca.-. 
43;   Cheely  v.  Clayton.  110  U.  S.  701,  4  Sup.  Ct.  328. 

if-«  Hilton  v.  (Ju.vot,  150  U.  S.  113,  108.  1(5  Sup.  Ct.  139:  <Jold  v.  Canham.  2 
Svvaust  325,  note,  1  Cas.  Cb.  311;  Tarleton  v.  Tarletou.  4  Maul.-  &  S.  JO; 
Kouitzky  v.  Meyer,  49  N.  Y.  571. 

If--  Hilton  V.  Guyot.  159  U.  S.  lir..  168,  16  Sup.  Ct.  139;  May  v.  Hn-oil.  7 
Cusb.  (Mass.)  15;  Burrougbs  v.  Jamiueau,  Mos.  1,  2  Strange,  733,  2  E<i.  Cas. 
CONF.L.— 3 


34 


C«»Nn.I(T   n|-    l.AW- 


W)  The  cxtnilrrritorijil  rlTcrt  of  jihI-^hh-hIs  in  |h  rsoii;iin.  nt  law 
or  in  •Miiiitv.  may  (liJTcr.  accnnliiij;  to  the  itarlics  to  the  canst'.  A 
jnd^rnicnt  of  that  kind,  Ix'twccn  two  citi/.cns  or  icsidcnts  of  the  conn- 
trv.  and  ilicicforo  snltjccl  to  llir  jurisdiiiinii  in  wliidi  it  was  icndcrcd. 
may  he  lu'ld  condnsivc  as  lid  ween  llicni  every  wlirn-.  So,  if  a  for 
ci^Micr  invokes  the  jurisdiction  by  hiinuin^  an  action  a^MinsI  a  (  iti 
zen,  hoih  may  l>e  lield  honnd  liy  a  jiidiinu'iit  in  favor  of  either.  Ami 
if  a  ciii/.en  sues  a  foreij^nei-.  and  jud-mcnl  is  rendered  in  fa\(ir  of  ihc 
latter,  hoth  may  be  held  e(|ually  bound.''" 

The  elfect  to  which  a  jud^Muent.  |»ui('ly  executory,  rendered  in  favor 
of  a  citizen  or  resident  of  the  country,  in  a  suit  there  broujjht  by 
him  a^xaiust  a  forei^nt-r.  may  be  entitled,  in  an  action  thereon  a<;ainst 
the  latter  in  his  own  country,  juesents  a  autre  ditticnlt  (|uestion,  njion 
which  there  has  been  sonu*  diversit\  ul  opinion."^"  The  cases  last 
cited  establish  that  by  the  law  of  lai-laiid.  prior  to  the  heclaratiou 
of  InilejM'iidence,  a  judi^ment  recovered  in  a  foreiun  country  for  a  sum 
of  money,  when  sued  ujton  in  Kni:lan<l.  was  only  prima  facie  evidi'nce 
of  the  demand,  and  suliject   to  be  examined  and  impeached. 

In  the  ((nirls  (»f  the  several  states  of  the  I'nion,  it  was  lonj;  aj;o 
rec<»;;ni/.ed  that  by  oui-  law,  as  by  the  law  of  Kii;iland.  forei-rn  jiidii 
ments  for  debts  were  not  i-oncliisive,  but  only  ])rima  facie  evidence  of 
the  matter  adjudj^ed.'""  In  mcuc  recent  times.  f(M-eii:n  judjiuuMits 
rend«-red  within  the  domiidons  of  the  laiulish  crown,  ami  under  tin* 
law  of  Kn;:land.  after  a  trial  on  the  merits,  and  where  no  want  of 
jurisdiction  uimI  n(»  fraud  or  mistake  is  show  n  or  otl'ered  t(»  be  shown. 

-Mir.  p.  r.L»4.  pi.  7,  1  Dickens.  AS.  Sw  NoveJli  v.  Knssi.  2  U:nii.  iV-  .\<!<)i.  T.'.T; 
r.istrique  V.  Iinric,  I..  H.  4  II.  L.  414.  4:!r>. 

>•'••' Hilton  V.  (Juynt.  iriJ»  r.  S.  li;i.  170.  ic  .s:ii|i.  CI.  l.'V.c  KUanlo  v.  (JjuTla.s. 
I'J  Chirk  A:  I".  ."'.tiS:  'I'lif  ( Jriffswjild.  S\\:i\>.  I.'.u.  i::.",:  Iljirlicr  v.  I.auili.  S  C.  H. 
l.N.   S.I  '.1.'.;     l..'!i   V.   l».iUili.    II    r,i--.   S.:.    led.   C:is.    .Nn.   S.l.'.l. 

>•'«». S«M«  Diiplei.x  V.  !)('  Uoveii.  '_'  Vviu.  .VKJ;  Slmlair  v.  I'r.is.r.  "J  I'at.  .Vpii. 
(,'a«.  'S>:\.  Mvr.  Diet.  4r.41i,  1  !>i>n;:.  ."..  note;  Cniwfunl  v.  \\liiit;il.  1  l>.nm.  4. 
Hole;  l'liillp>i  V.  HiuUcr.  ■_'  II.  r.l.  Itij.  mil.  im:  I'.iicli.iii.iii  V.  Kiirji.i-.  1  Cmiiiji. 
<!."»  <i7;    lljuris  v.  Siniiiilcrx,  4  Itarii.  iV  C.  411. 

i'">Hlssr||  V.  Urit'Ks.  U  Mass.  4(il.';  .Miilillrscx  I'..iiiU  v.  I'.iuiiian.  !.".•  Mr.  1!». 
i;i:  Hryaiit  v.  Kla.  Smlfli  cN.  II.)  :i\H\,  4oi:  Itatlih.Mi.'  v.  'W'viy,  1  K.  1.  7;;,  7tJ: 
IimiK.Mk  V.  Alckeu,  1  Caiiich  (N.  Y.j  4W;    iU'Ulou  v,  Burgot,  10  Sery.  &  K. 

lI'U.)   Jlo   .'Jlj. 


A<TK)NS    ON    Jl'DGMENTH.  5i''> 

li;i\c  Itftii  liTjilf'il  ;is  (■(iiirliisi\c  liv  llir  lii;;licH(  ((mils  nf  N<'\v  ^'^lI•k. 
31jiiiic,  iiinl  Illinois."'' 

In    lllc    I'llilcd    Sliilrs   Sll|il(  MM'   loilll,    ill    Mm-    !<  ;i(|iii;:    cjisc   of    Hilton 

V.  (Iiivol."'-'  Ironi  liic  opinion  in  wliiiji  nninv  of  ilio  foic^ioin;;  Kiah- 
nicnls  liavr  Ikm'U  lak«*ii.  it  is  said  on  jiatic  liOL'.  l.".M  l".  S..  and  j.aj;c  MS, 
Hi  Sup.  Ct.,  dial,  "in  view  of  all  tlic  autlwnitios  upon  liio  sulij<-cl, 
and  of  the  licnd  of  jndiiial  oi)inioii  in  tins  t-onnliy  and  in  Kn;iland. 
followin';  the  Itad  of  Kent  and  Story,  we  are  satiHtied  that,  wluM-t- 
tlurc  has  been  opiiorlnnily  for  a  full  and  fair  trial  abroad,  before  a 
t oui't  of  c'om])el<iil  jntisdiction.  condnclin^  llw  liial  upon  r<';^ulai 
jii'0ceedin}2;s,  after  dii<'  cilaiion  or  volnniaiy  apix-arancc  of  tin-  dr 
fendaiit,  and  undci  a  system  of  jnrisijrndmee  likely  to  secure  an  inii)ar 
tial  administration  of  justice  between  the  citizens  of  its  own  ((tnniry 
and  those  of  other  countries,  and  there  is  nothing,'  to  show  either 
prejudice  in  the  court,  or  in  tho  system  of  laws  under  which  it  was 
sittinjr.  or  fraud  in  |)rocurin^^  the  judgment,  or  any  other  special  reason 
why  the  comity  of  this  nation  should  not  allow  it  full  elTect,  the  merits 

of  the  case  should  not.  in  an  action  brouj^ht  in  this  country  ni the 

judj-ment,  be  tried  afresh,  or  on  a  new  trial  or  appeal.  ui»on  tlie  nn-ie 
assertion  of  the  jiaify  tlinl  The  jud<,Mnent  was  erroneous  in  law  or  in 
fact."'^''" 

Hut  both  in  this  coimtry  and  in  En},'land  a  foreijjn  jud^znu-nt  nniy 
be  impeached  for  fraud;  ^''^  and  jud^nnents  render<*d  in  a  foreij^n 
country  by  the  laws  of  which  our  own  judgments  are  reviewable  upon 
the  merits  (as  they  are,  for  example,  in  France)*  are  not  entitled 
to  full  credit  and  conclusive  effect  when  sued  upon  in  a  federal  court 
in  this  country,  but  are  prima  facie  evidence,  only,  of  the  justice  of 

i''i  I.iizitr  V.  Wisicuti.  LT,  N.  Y.  14(3,  IGO;  Dunstaii  v.  ni^';,'iiis.  i;iS  N.  Y.  Tti. 
74,  ;;;:  X.  i:.  Tlili;   liankiu  V.  (Joddard,  54  Me.  28:   Baler  v.  Palmer.  S'.  III.  ."kkS. 

161'  i.-,ii  f.  s.  113.  li;  Sup.  Ct.  139. 

i«-' Als^o.  Ritchie  v.  McMuUeu.  ir>9  U.  S.  'Sir>.  10  Sup.  Ct.  171. 

i«4  Hilton  V.  C.uyot.  l.".!)  U.  S.  113,  201!.  10  Sup.  Ct.  130;  Vadala  v.  Lawos. 
2.">  Q.  B.  Div.  310:  Duchess  of  Kingston's  Case.  20  How.  St.  Tr.  543.  iiotf.  2 
Smith.  Lead.  Cas.  Eq.  I'M:  Ochsenbein  v.  Papelier,  8  Ch.  App.  (.0.1;  Messina  v. 
retrocochino.  L.  R.  4  P.  C.  144.  ir.7;  Abouloff  v.  Opiienheimcr.  10  Q.  B.  Div. 
295,  305-308;   Crozat  v.  Brojidcu  [1804]  2  Q.  B.  30.  :?4.  3.-.. 

♦Holker  v.  Parker,  Merlin.  Questions  de  Droit.  Judsrnieut.  «  14.  No.  2: 
Moreau,  No.  106;  Clunet.  1882,  p.  166,  and  IS^.  p.  913:  Sirey.  1892.  1,  201. 
quoted  in  Hilton  v.  C.uyot.  l."0  U.  S.,  at  page  217.  10  Sup.  Ct.  139. 


36  CONFLICT    OF    I,AWS. 

tli('  pliiiiilifTs  claim.  Tii  lutldin^  kucIi  a  jud^Tiicnl.  for  want  of  rcci- 
procitv,  not  to  be  conclusive  evidence  of  llic  merits  of  tin-  (  laim,  the 
court  <lofs  not  jtrocccd  upon  any  tlioorv  of  nlaliation  npmi  oiio  per- 
son by  reason  of  injustice  done  to  another,  but  upon  tlie  broad  jjround 
that  international  law  is  founded  upon  mutuality  and  reciprocity,  and 
that  by  the  principles  of  international  law  as  recopnized  in  most  civil- 
ized nations,  and  by  the  comity  of  our  own  country,  the  judj^ment  of 
a  forei<;n  court  which  docs  not  consider  a  jud-^ineiit  of  a  court  of 
anothei-  jurisdiction  conclusive  is  itself  not  (nit  it  led  to  be  considered 
conclusive  here.^"* 

In  New  York,  foreijjn  judgments  are  held  conclusive  so  far  as  to 
preclude  a  retrial  upon  the  merits,  although  it  is  competent  for  the 
defendant  in  an  action  thereon  to  show  that  the  foreign  (  onrt  had  not 
jurisdiction  over  the  subject-matter  of  the  original  suit,  or  that  the 
defeiulant  was  never  served  with  process,  or  that  the  judgment  was 
fraudulently  obtained.^"'  And  although,  in  the  cases  just  cited,  the 
judgments  were  in  fact  rendered  in  England  or  Canada,  it  is  not 
suggested  that  the  result  would  have  been  otherwise  if  they  had  been 
rendered  in  a  country  whose  courts  do  not  give  like  conclusive  elfect 
to  judgments  rendered  here.  The  question  whether  the  "rule  of  reci- 
procity" adopted  in  Hilton  v.  Guyot  ^"^  would  be  applied  in  New  York 
does  not  appear  to  have  been  considered.^"' 

(2)  As  hetv'ftn  States  of  tlie  TJnhm. 

By  the  common  law,  before  the  American  Kevolntion.  all  the  courts 
of  the  several  colonies  and  states  were  deemed  foreign  to  each  other^ 
and  consecpiently  ju<lgments  rendered  by  any  one  of  them  were  con- 
sidered as  foreign  judgments,  and  their  merits  re  examinable  in  an- 
other colony,  not  only  as  to  the  jui  isdiition  of  I  he  court  which  j)ro- 
nounced  them,  but  also  as  to  the  merits  of  tiie  controveisy,  to  the 
extent  to  which  they  were  understood  to  be  re-4>xaminable  in  Eng- 
land; and,  in  order  to  remove  iliat  inconvenience,  statutes  were  in 
some  cases  passed  by  which  judgments  rendered  by  a  court  of  compe- 

i«»  Hilton  V.  Guyot,  150  U.  8.  113,  210,  22S.  It',  Sup.  (1.  l.J'.t. 
>««  Lazier  v.  WoHtcott.  2«  N.  Y.  MC,,  Lll;    Duiislaii  v.  IIIk^'Ius,   1:W  N.  Y.  70, 
33  N.  K.  725>. 

>•'  \:A\  U.  8.  113,  210.  22K.  1«  Sup.  Ct.  \\V^. 

»••  See  Nouvlou  T.  Freeuiau,  15  Ai>p.  Cua.  1,  13. 


ACTIONS    ON    JUDUMKNTS.  37 

tent  jurisdiction  in  Ji  iici^hltorinj,'  cnldiiv  ( mild  imt  Itf  inipoachHl.'*" 
It  was  bcrausc  of  tlial  roiMlition  of  ilu-  l;i\v.  as  bi'twrt-n  the  Aineii 
can  colonics  anil  stales,  (hat  tlie  I'nitcd  Stales,  at  the  l)e;,MnninK  '><" 
their  existence  as  a  nation,  ordained  that  full  faith  and  credit  shonld 
be  s'ven  to  the  judgments  of  one  of  the  states  of  tl»e  Union  in  the 
courts  of  another  of  those  states.^'"  "Full  faith  and  credit  shall  be 
given,  in  each  of  these  states,  to  the  records,  acts  and  judiiial  i»io 
ceedin<;s  of  every  other  state;  and  the  cou^^ress  may  by  general  laws 
prescribe  llie  maiiner  in  which  such  acts,  records  and  proceedin<rH 
shall  be  proved,  and  the  effect  thereof."  ^^^  Thereafter  congress, 
after  prescribing  the  manner  of  authentication  and  proof,  enacted, 
and  the  Revised  Statutes  now  provide,  that  "the  said  records  and  judi- 
cial proceedings  so  authenticated,  shall  have  such  faith  and  credit 
given  to  them  in  every  court  within  the  United  States,  as  they  have 
by  law  or  usage  in  the  courts  of  the  state  from  which  they  are 
taken."  ^'^ 

Tlie  result  of  these  provisions  is  that  the  judgment  of  a  court  of 
one  of  the  states  is  conclusive  in  every  court  (including  the  fedenil 
circuit  and  district  courts)  within  the  United  States.  Thus,  in  the 
early  case  of  Mills  v.  Duryee^'^  it  was  held  that  mil  ti<l  rta>r<l, 
and  not  nil  dSet^  was  a  proper  plea  to  an  action  brought  in  a  federal 
court  in  the  District  of  Columbia  upon  a  judgment  recovered  in  a  court 
of  the  state  of  New  York.^^* 

These  provisions  of  the  constitution  and  laws,  however,  are  neces- 
sarily to  be  read  in  the  Ught  of  some  established  principles,  which 
they  were  not  intended  to  overthrow.  They  give  no  effect  to  judg 
ments  of  a  court  which  had  no  jurisdiction  of  the  subject-matter  or  of 
the  parties,^"  noi-  an  effect  beyond  the  scope  of  the  jurisdiction  which 

i6»  Bissell  V.  Briggs,  9  Mass.  4G2,  4G4,  4(1.'.:    Story,  Coust.  %%  loOC,  13U7. 

170  Articles  of  Coufederation  of  1777,  art.  4,  g  3. 

171  Const,  art.  4,  §  1. 

172  Rev.  St.  U.  S.  §  905. 

173  7  Craucb,  4S1,  484,  485. 

174  Atlanta  Hill  Gold  MIn.  &  Mill.  Ca  v.  Andrews.  120  N.  Y.  RS.  fil.  2.-?  N.  E. 
987;  National  Bank  of  City  of  Brooklyn  v.  Wallis,  59  N.  J.  Law.  4r..  \W  AU. 
983. 

175  Huntington  v.  Attrill.  146  U.  S.  G57.  685.  13  Sup.  Ct.  224:  p-An-y  v. 
Ketchum.  11  How.  IG.");  Thompson  v.  Whitman.  IS  Wall.  4.">7:  Grover  &  Baker 
Sewiug-Mach.  Co.  v.  Kaddiftc,  1^7  U.  S.  287,  294,  11  Sui-.  Ct.  l>2. 


38  CONFLICT    OF    l.AUS. 

ilic  rourt  dill  have  in  :iii  :ii  rmn,  iIi(iiil;1i  iIiiIv   Itioiiulii  ln'forc  it  for  ccr- 
t.iiii  purposes."" 

.liiris»Ii<(ioii  is  ilic  ri;:iii  lo  atljiuliralc  «(»iir<iiiiM;;  llu*  siilijocl-iuallcr 
in  tlic  ^'ivoij  case.  To  coiistidilc  this  there  are  three  essentials: 
I'ii-st.  the  court  must  have  co^ini/.aiue  of  tlie  class  of  cases  to  which 
lln-  o!M-  to  \h-  adjud-rd  l»ch)iiL:s;  second,  the  ]M(»|mi  parlies  must  he 
|ii(  stilt  ;  and.  thiid.  the  |  mini  dccid.  d  niiisl  in-,  in  siilislaiiir  and  ell'rct, 
williiii   llic   issues.'"' 

In  nrdrr  that  a  court  of  one  slate  may  acquire  jurisdiction  in  an 
action  hi  per}<onain  a<?ainst  a  nonresident,  so  as  to  render  its  jndir- 
meiit  TtiiMlin*:  npcMi  the  courts  of  other  states,  service  nnist  bo  made 
within  the  territorial  jurisdiction  of  the  court,  or  the  defendant  must 
voluntarily  apjicar  in  tiie  action,  in  order  tliat  he  may  he  personally 
hound;  or,  if  the  action  is  in  ran,  the  property  must  not  only  ho 
within  the  state,  hut  must,  by  attachment  or  otherwise.  l>o  ])roiiirht 
within  the  .oiilrnl  of  the  c(»urt.  or  the  actidii  must  in  some  form  be 
oiv  to  i-eacli  <»r  disjiose  of  specitic  prnperty  within  the  slate,  as  in  an 
action  to  foreclose  a  nnutf^a^'e  or  for  partititm.  In  such  cases,  the 
jud^Muent  is  valitl  to  the  extent  of  the  property  thus  alVectcd.  but  no 
further.''" 

A  jnd;;ment  rendeivd  in  oiw  state,  under  its  hical  laws  upon  the 
subject,  may  be  valid  there,  and  yet.  under  the  principles  just  stated, 
be  invalid  in  other  states.'"''  A  law  which  substitutes  constructive 
fni  aitual  sci\ice  is  bindini:  upon  iieisims  (hnnicih-d  wilhin  tlie  stat(\ 
wiieie  such  law  jirevails.  and  as  respects  the  |)roperiy  of  others  situ- 
ate<l  theie,  but  can  bind  neither  person  noi-  projierty  beyond  its  liin- 
it.s'-" 

>T«  V;iii  Clnif  V.  Iluriis.  l.L-.  N.  V.  ."|(i.  I'.o  N.  i:.  C.Cl. 

I'-  KcyrmJilH  v.  Stoctitoii.  1  Jo  t  .  .»<.  'J.M.  JCkS.  11  Sup.  Ct.  TT:'.;    limit  v.  Iliiiit. 

:::  .\.  v.  iii7.  irjs. 

I*"  Uccd  V.  CliilHin.  Hi:  .\.  V.  l.'iL'.  .!•;  N.  Iv  KS|;  .Inlmson  v.  IV.wcrs.  l.'.It  U. 
S.  l.'M!.  l."i!».  11  Sup.  Ct.  .'2r»;  CrDVcr  &:  It.ikci-  Scwiu;; Madi.  Cd.  v.  ll.'ullilTc, 
l.'iT  r.  S.  2S7.  11  Still.  ''••  '•*-:  rtiUKiyiT  v.  .\«IT.  IK".  I'.  S.  714:  (Jiiliirli'  v.  I,<i\\r.v, 
R4  Pa.  St.  TtXV,  rrcHJdciit.  etc..  of  Itniik  of  liiii<<|  St;itrs  v.  .Mcrcli.nnts'  H.iiik. 
7  <;ill  <M<I.)  41.'.;  Wcnvcr  v.  ll<>k'K«.  ••H  .M«l.  2.'.:..  Ituf.  ns  to  MitMihni.iil  of 
I  hoH«-!«  ill  action,  hcc  Nntlonal  Khv  lus.  Co.  v.  ('Ii.iiiiIkts.  .'.:'.  N.  .1.  Ki|.  tc^s,  481, 
',',2  All.  iM'k'.. 

ITS  Steel  V.  Smith.  7  Wafts  &  S.  (Pa.)  117;    Hill  v.  r.nwuMii,  11  L;i.  II.'.. 

!•<»  Weaver  v.  liuggx,  l!t>  Md.  1J05. 


ACTIONS    ON    JlMKiMKNTS. 


39 


Tlic  ;i|i|ii  jiiJIIIcr  of  ;i  (lrf(ii<l;ilit.  ill  <il<i<i  In  iil»\i;ilr  tin-  lUMM-HHilV 
of  s(M\  ice.  imisl  hr  ;,m'I1('1;i1.  WIkh  |i<-  wishes  lo  |.i<\.iil  ;i  jiKl^riiH-iif 
l»,v  <lcf;nill,  l»v  |in-stiiliii;X  lo  tlic  coiiil  iIh-  fartn  sliowii^i  its  lack  of 
jniisdiction,  and  al  tin-  same  time  dors  not  iulriid  lo  sniijfct  liiiiiKcIf 
lo  the  jnrisdiclioii  of  llic  roiiit,  Ik-  iiiii>I  ••a|t|M-ar  s|m«  iail> ."  for  tli<' 
piii'pose  of  raising  ilic  <iiicslioii  of  juiisdinion  In  iiioli(»ii:  oi  Im'  may 
allow  the  iilaiiililt  to  ^o  on  and  take  jiid;:nuiit  liv  dt-faidt.  \\itli<iiit 
atlVctin*;  his  lijilits  in  personam,  since  no  jndj;iiici»t  entered  wiiliont 
service  of  process  in  some  I'diiii  cnuld  hind  him.  ami  the  (pieslion 
of  jurisdiction  would  protect  him  al  any  sta^e  of  the  proceedinj,'H 
for  its  enforcement,  jdovided  it  lias  not  lieen  waived  l»y  his  own  art. 
r.nl  if  he  once  apjicars  ^^cnerally.  the  ((tint  lliereii|.(.ii  has  jiii'i^diction 
of  him  persoiiiilly;  and  if  it  also  has  jniisdiction  of  the  subject 
matter,  he  is  bound.  An  answer  thereafter  intei|iosed  by  him.  raisin;; 
the  question  of  jurisdiction,  is  unavailing,  and  the  jud-ment  will  be 
recognized  as  valid  in  other  states.^-* 

The  constitutional  provision  and  statute  ab(tve  referred  to  confer 
no  new  jurisdiction  on  the  courts  of  any  state,  and  therefore,  for  ex 
ample,  do  not  authorize  tin  in  lo  take  jurisdiction  of  any  suit  or  prose- 
cution of  such  a  penal  nature  (in  the  st-nse  elsewhere  stat.Mli  that  it 
cannot,  on  settled  rules  of  imblic  policy  or  international  law.  Im-  enter- 
tained by  the  judiciary  of  any  other  slate  than  that  in  which  the 
jienalty  was  incurred.' ^^ 

Nor  do  these  provisions  put  the  jud^iiieiils  of  other  slates  ujion  the 
footing  of  domestic  jud^nients.  to  be  <'iifoiced  l>y  executi<»n:  but  they 
leave  the  manner  in  which  ihey  tnay  be  enforced  to  tlie  law  of  the  state 
in  whicli  they  may  be  sued  on,  pleaded,  or  (dTered  in  eviden.-e."" 
i;ut  when  duly  ]»leaded  and  proved*  in  a  court  of  that  state,  they 
have  the  eft'ect  of  being  not  merely  jiiiiiia  facie  evidence,  but  conclu- 
sive proof,  of  the  rights  llieieby  adjudicated:  and  a  refusal  to  give 
them  the  force  and  effect  in  this  resiK'ct  which  they  had  in  the  state 
in  which  they  were  rendered  denies  to  the  party  a  right  secunMl  to 
him  by  the  constitution  and  laws  of  the  Vnited  States,  and  by  a  writ 

isi  Kocd  v.  Chilson.  l-ll.*  N.  V.  i:.J.  .'.<;  N.  K.  {vM. 
182  Huntington  v.  AltriJl.  UC.  V.  S.  ir.T.  («."..  l.T  Sup.  Ct.  224. 
1S3  McElmoyle  v.  Coheu.  1.5  IVt.  :!1U'.  .".i:.":    Wiscmsiu  v,  IVlicau  Ins.  Co.,  1-7 
IT.  S.  '2/Ho.  li'J2.  8  Sup.  Ct.  IMTO. 

*  Ensign  v.  Kindred,  K>'^  I'a.  St.  (>;i!>.  30  .Vti.  2~i. 


40  ooNKi.irr  of  laws. 

of  «  rini-  from  a  judirnuMit  a<j;ainst  tin*  pait.v  ilnis  dniiid  siidi  ri<;h(s 
th<  ( ;is»'  may  ho  takt-n  to  the  Tnited  States  siipifmc  coiiri  for  i-cn  it-w. 
wlinc  tlio  jiidixmout  will  bo  rovorscd  and  tlio  cas«'  icmaiidcd  for  fur- 
tluT  i)roott'<liuj;s.*''*  In  short,  ju(l;;m('iits  recovered  in  one  state  of 
tlie  Union,  wlien  prov<'d  in  the  rourts  of  another.  dilTei-  fiom  judp- 
nn'nts  recovered  in  a  foreign  conntry  in  no  oilier  respeet  than  that 
of  not  beinjx  examinable  upon  the  merits,  nor  impi-adiable  for  frand 
in  obtaining:  them,  if  rendered  by  a  court  having  jiiiisdirtion  of  the 
cause  and  of  the  parties.^"^ 

Itut  as  to  whether  fraud  in  |>roturin<;  a  jud;;meiit  in  one  slate  may 
be  a  j^round  for  the  refusal  of  the  courts  of  another  state  to  reeo;;- 
nize  it,  the  cases  just  cited  may  be  compared  with  Hunt  v.  Hunt  *" 
and  White  v.  Reid.^'^  The  seeming  discrepancy  is  apjiarently  ex- 
plainable on  the  ground  that  where  any  question  of  fraud  is  involved 
in  the  original  action,  and  has  bcHMi,  or  mii;ht  have  been,  passed  on 
and  decided  by  the  court,  the  same  (pnslion  cannot  be  reopened  for 
examination  in  a  subsequent  a«tion  upon  the  judgment  in  another 
state,  while  if  the  original  judgment  was  ])rocured  by  fraud,  con- 
sisting in  preventing  the  unsuccessful  party  from  fully  exhibiting  his 
ease,  by  fraud  or  deception  practiced  upon  liiiu  by  his  op]>onent.  the 
facts  establishing  sudi  fraud  may  be  shoun  in  an  action  upon  the 
judgment  in  another  state.'*' 

»«*  IIunthiptoD  T.  Attrlll.  140  U.  S.  <;57.  USr>,  13  Sup.  Ct.  2*Jt;  Christmas  v. 
Uu-ssell.  r,  Wall.  'JiHi;  Greeu  v.  Van  Itiiskirk.  '»  Wall.  liOl,  7  Wall.  131);  Car- 
p.riUT  V.  Stranp'.  HI  V.  S.  87.  11  Sup.  Ct.  JH'.O. 

>«»  Haiik-y  v.  Douoghue,  IIU  V.  S.  1,  4.  0  Sup.  Ct.  2411;  Chrislnias  v.  Uussell, 
n  Wall.  2U0.  :{<jr>;  Wlsfonsln  v.  rdlcan  lus.  Co.,  Ilt7  V.  S.  20r.,  2;>2.  8  Sup.  Ct. 
i:;70;  Hilton  v.  niiyot.  ir.'J  U.  S.  li:;.  1S4.  l.S,-..  lO  Sup.  ct.  i:!!i;  Mooucy  V. 
lIimlH.  H;o  .Mass.  Uit.  lUi  N.  E.  484. 

>««7'J  N.  Y.  i;i7.  2'S>. 

»«T  70  Ilun.  VM.  1^4  N.  Y.  Siipp.  •J'.^\. 

»«»Whltp  V.  U«'i(l.  70  Ilnn.  1J»7.  LM  \.  V.  Supj),  'Jlto;  M.M.ncy  v.  ITIn.ts.  lOi 
.Maw.  4t;'.t.  .'.i;  .\.  K.  4.S.I;  National  liauk  of  City  of  Hruokiyn  v.  Wjillis  r.<>  .\.  .1. 
Law,  4«;,  :t4  Atl.  1»h;'..  And  for  cotnitiirl.s  »n  of  the  ruN-  iii  caso  of  Judguiuuls  of 
■  furclKU  couutry,  see  N'adula  v.  Lawts,  1^.'.  y.  15.  Dlv.  ;jlo,  ;ut). 


INTUATKRIIITOIUAL    OrEKATION    OF    LAWS.  4  1 


22.     JUDGMENTS  IN  REM  AND  IN  PERSONAM. 

A  jiidp^inent  in  rein  binds  only  tho  property  within  the  control  of 
the  court  which  reiKierod  it,  and  a  judn^niont  !ji  prrxoufim  hitidH  only 
the  parties  to  that  judgment  and  those  in  privity  with  them."'  Thui*, 
a  judgment  recovered  against  the  administrator  of  a  decesiHod  imthoii 
in  one  state  is  no  evidence  of  a  debt,  in  a  subsequent  suit  by  the 
same  plainlilT  in  another  state,  either  against  an  administrator  (wh<'fh- 
er  the  same  or  a  dilTerent  person)  appointed  there,  or  against  any  other 
person  having  assets  of  the  deceased;  for  the  original  defendant's 
representation  of  his  intestate  is  a  qualified  one,  and  extends  not  be- 
yond the  assets  of  which  the  ordinary,  or  other  oflicer  or  court,  from 
whom  he  receives  his  authority,  had  jurisdiction.*"* 

23.     EFFECT  OF  STATE  LAWS  ON  ABSENT  CITIZEN. 

A  citizen  of  a  state  is  so  far  bound  by  its  laws,  in  consequence  of 
the  allegiance  which  he  owes  to  it,  that,  even  though  he  is  absent, 
he  is  bound  upon  a  judgment  rendered  against  him,  without  jtersonal 
service,  but  by  some  form  of  advertisement  or  other  substituted  serv- 
ice, which  is  recognized  as  valid  by  the  laws  of  his  state."* 

24.     INTBATERRITORIAL  OPERATION  OF  LAWS. 

"All  laws  duly  made  and  published  by  a  state  bind  all  i)ersons  and 
things  within  that  state."  ^^^  A  citizen  of  a  state,  going  into  another 
state,  owes  a  temporary  allegiance  to  the  latter  state,  and  is  bound 
by  its  laws,  and  is  amenable  to  its  courts.     If  in  such  a  case  he  is  not 

189  John.soa  v.  Powers,  loD  U.  S.  ir.«i.  151).  11  Sup.  Ct.  '.25;  Hilton  v.  Giiyot, 
159  U.  S.  113,  1G7,  16  Sup.  Ct,  139;  Chiua  Mut.  Ins.  Co.  v.  Force.  142  N.  Y.  90. 
95.  36  N.  E.  874;   Reed  v.  Chilson.  142  N.  Y.  152.  36  N.  E.  8S4. 

190  John-son  v.  Powers.  130  U.  S.  156,  159.  11  Sup.  Ct.  525;  Stacy  v.  Tlirasht-r. 
6  How.  44;    Low  v.  Bartlctt,  8  Allen  (Mass.)  259. 

181  Douglas  V.  Forrest,  4  Bing.  <5S6:  Bocquet  v.  MacCarthy,  2  Barn.  &.  Add. 
951;  Martin  v.  Nlcolls,  3  Sim.  458;  Schibsky  v.  Westenholz.  L.  R.  G  Q.  B.  155. 
See  Hunt  v.  Hunt,  72  N.  Y.  217,  238. 

192  Story.  Confl.  Laws,  §  395;  Comp.anhia  de  Mooambique  v.  British  S<iuUi 
Africa  Co.  [1802J  2  Q.  B.  3^.  395;  Allen  v.  Buchanan,  97  Ala.  399,  11  South. 
777. 


12  CONFLICT    OK    LAWS. 

:  \  1(1  will)  jtiitccss,  lie  is  iioi  ImmiihI  (u  ;iii|i«';ir  in  I  lie  ;i«ii(»n.  Tie  can 
st;in<l  aloof,  and  so  Ion;,'  as  lir  dots  so  lie  ((uild  not  ho  alToclod  hv  llio 
|iro(«'odiii<;;  hiU  if  lie  clioosrs  to  avail  liinisolf  of  the  iij:lit.  given  by 
liic  laws  of  tlu*  slate  wlicic  tin*  atlion  is  hronj^ht.  to  filo  an  answer, 
and  cont«'st  the  claim  of  the  plaintilT,  he  is  liound  bv  the  conseiineuces 
wliirh  the  local  laws  allix  to  siidi  a  |>idcccdiii^. — -as,  for  instance,  a 
|tidvision  that  snch  steps  shall  ho  deemed  ('(jnivalent  to  an  appoaranee 
in  the  action,  and  shall  disponso  with  the  seiviie  of  citation,  lie 
conid  not,  under  such  ciicnmstaiK  os,  invoke  the  gen«'ral  rule  that  an 
answer  on  the  merits  does  not  waive  an  objection  to  jurisdiction,  be 
cause  the  statute  in  such  a  case  intervenes."** 


25.     FOREIGN  MARRIAGES. 

Tlie  Enirlish  rule  seems  to  be  that  it  is  indispensable  to  the  valid- 
ity of  a  niairia;,'e  that  the  lex  loci  actus  be  satistied,  ^1)  so  far  as 
re;:ardH  the  forms  or  ceremonies;  (2)  so  far  as  regar«ls  the  consent 
of  jiaionts  or  ;^uardians:  (.'?)  so  far  as  regards  the  capacity  of  iho 
pai-ties  to  contract  it, — whether  in  resjiect  of  the  prohihite<l  de;.;rees 
of  atlinity  or  in  respect  of  any  other  cause  of  incapacity,  whether 
ahsoliito  or  rclaii\o.T  i'.ut  the  fact  that  it  iloes  in  these  respects  com- 
jil_\  with  the  lex  loci  actus  is  not  necessarily  con<lnsive  of  its  validity 
in  ]On;;land. 

As  a  ;jenoral  pro|»osition,  the  validity  of  a  maiaia;:;f  contract  is  to 
be  dcicrniined  by  tlio  law  of  iln-  siaic  where  it  is  entered  into.  If 
valid  there,  it  is  valid  everywhere,  unless  c(uiti'ary  to  the  pr<thihi 
tions  of  natural  law  (tv  the  expi'ess  |»r(»hibitions  of  a  statute  of  the 
stale  where  its  validity  is  hrouLilii  in  issue.'"*  There  are  exceptions 
to  this   rule, — cases,   tirsl.  of   incest    or  po!\;,Mniy,   coming;  within   the 

'""•JotifH  y,  JoiH'8,  lOH  N.  V.  4\:,.  JliT.  1.'.  .N.  K.  To7;  His.scll  v.  l^ri;:;,'-;.  9 
M:i--     \<:\ 

i  W.sil.  J'rlv.  Int.  Law.  :..'!.  .V4. 

104  u,.x  V.  .MjkIijkIo,  4  Uiihh.  'SS>;  I'mIIit  v.  Mmwn.  ."»  Kjisf.  L".0;  \\;iricn(l<r 
V.  Wiirn-ndcr.  2  ("lark  &  V.  .'iLIJ.  .'.'',0;  ('(niiifli.v  v.  Cunnrlly.  U  Kii^.  baw  \-  K(|. 
r»70;  Iialryiiiple  v.  Dnlryniid*',  1'  1I:ihk-  ('"HsIsL  .'.J;  'riii.tii  v.  'I'lioni.  !M)  N.  Y. 
•!02;  Van  Voorbis  v,  Ilrlntiiall.  St]  N.  y,  18;  I'aiimi  v.  Il.iv.y.  1  Cra.v  (.Mass.) 
110:  r)l«'kK«»n  V.  DIckKoii'b  Ib-lrH,  1  Ycrg.  (Tcini.j  llo;  Siiv.nsdii  v.  (Jray,  17  B. 
.M..n.  (Ky.i  V.Ki. 


I'OKl.K.N     KIVoICi  KM.  4'i 

[ii'oliihilions  of  ii;ilui;il  I;i\v;  ""^'  sccuml.  of  pKiliiliiiion  l»v  jM»sitiv»-  hiw 
Tims,  a  slalc  ini^rlil  pniviili'  lliat  a  man  ia;,M-  hv  one  of  its  (»\mi  i\\\/j}\~ 
williout  the  slalc.  after  a  dccriM'  of  (ii\<»i<«'  had  Imm-ii  ;^i;iiit»'(I  a^,'aiIl^l 
him  in  llic  stale,  in  favor  of  a  fonm  r  wife,  should  be  voir).  I'.iil.  in 
liie  alisence  of  any  smh  express  piovision.  a  mere  |irohil)ition  upon 
his  marrying  a^ain  would  not  have  Hueh  an  elTect.  Thus,  if  A.  pro- 
(Ui-es  a  decree  of  absolute  divoi'c<'  a;i;ains(  H.,  in  New  ^'or■k.  when? 
the  statute  provides  that  the  def<Midant  in  such  case  shall  not  marry 
anain  tintil  the  dealli  of  Ihe  plainiilV.  \r\  if  I',,  does  ;^o  to  N'ew  .lfrst\. 
even  though  for  the  expicss  purpose  (»f  niarryiu;^  there,  and  the  mar 
riaj;e  there  celelirated  is  valid  undei-  the  laws  of  New  Jersey,  it  wilJ 
he  valid  for  all  [iurposcs  in  New   ^'ork.''"* 

26.     FOREIGN  DIVORCES. 

As  elsewhere  stated,  jurisdiction  over  personal  status  is  Kf»verned 
by  the  hiw  of  domicile,  and  while  the  domicile  of  a  liusband  usually 
deterniiues  that  of  the  w  ife,  this  does  not  apply  in  actions  for  divorce 
based  on  the  husband's  wron<;.  The  leadinj;  classes  of  cases  invoh 
in<;-  the  validity  in  one  state  of  a  divone  ^^ranied  in  another  will  n<»w 
be  considered: 

(a)  In  the  case  of  a  divorce  jrranted  in  a  state  where  both  parlies 
had  theii-  domicile  at  llie  lime  the  acti<m  was  conmieui  ed.  if  the  d.- 
fendant  was  served  personally  with  process  within  the  territorial  juris 
diction,  or  v«)luntarily  appeared  in  the  action,  the  divorce  is  rej,Mrded 
everywhere  as  valid  and  binding;  and  if.  in  smh  a  <  a>4-.  ihc  defendant 
was  neither  so  served  noi'  aiipeaied  in  the  action,  but  was  served 
by  jiublication  or  by  oth«'r  substituted  service  sufli<ienl  under  the 
laws  of  the  state  where  the  decree  was  jjranted,  and  where  l>oth 
jtarties  were  domiciled,  the  decree  is  still  entitled  to  full  credit  every 
where.^"^ 

105  Wightman  v.  Wighlni.iii.  4  .Tohiis.  Cli.  (N.  Y.)  lUll;  Hutchins  v.  Klmm.-Il. 
31  Mich.   i:^!3. 

lOG  Vau  Voorbis  v.  Brininall.  81!  N.  Y.  IS;  Tliorp  v.  Tliori).  9U  N.  Y.  tXt'J: 
Com.  v.  Laue,  11".  Mass.  -t.'.M  rutiiam  v.  Putnam.  8  Pick.  (Mass.)  433:  Com. 
v.  Huut.  4  Cush.  (Mass. I  4!»:   Smitm  v.  Warron.  10  Meto.  (Mass.)  4r>3. 

If-  Hum  V.  Ilnni.  72  N.  V.  JIT.  1.M1:  Campboll  v.  Campbell.  OO  Hnn.  233.  35 
N.  Y.  Supp.  JSo,  O'Jo;    lu  ic  Di'uick,  'Jj.  iiuu,  liJl,  'M  N.  Y.  Supp.  olS;    Bissell 


U  CONFLICT    OF    LAWS. 

(b)  In  the  case  of  a  divorce  granted  in  a  state  where  only  the  phiin- 
titT  is  domiciled,  and  the  defendant  appeared  in  the  action,  or  was 
served  with  process  within  the  territorial  jurisdiction,  the  decree  is 
still  accorded  extraterritorial  effect.^"*  But  if,  in  such  a  case,  the 
nonresident  defendant  does  not  appear  in  the  action,  and  is  not  served 
with  process  within  the  territorial  jurisdiction,  the  question  of  wheth- 
er a  decree  of  divorce  is  of  binding  effect  without  the  state  where 
it  is  rendered  is  the  subject  of  a  sharp  difference  of  opinion,  and  the 
decisions  in  different  courts  are  diametrically  opposed.  The  New 
York  doctrine  is  that  such  a  decree,  rendered  in  another  state,  is  abso- 
lutely invalid  in  New  York.^®^ 

The  opposite  doctrine  is  adopted  in  many  states,  where  it  is  held 
that  the  courts  of  a  state  where  the  plaintiff  resides,  although  the 
defendant  resides  elsewhere,  are  empowered  to  determine  the  status 
of  its  citizen,  and  hence  to  establish  such  statns,  by  a  decree  of  divorce, 
as  that  of  an  unmarried  person;  and  that,  as  one  party  to  the  mar- 
riage cannot  be  a  single  person  while  the  other  continues  to  be  a 
married  person,  the  status  of  both  is  thereby  determined;  and  that, 
as  the  court  rendering  the  decree  has  jurisdiction  to  determine  the 
cause,  its  decree  is  binding  upon  the  other  states,  under  the  United 
States  constitution, 2°°  requiring  each  state  to  give  full  faith  and  credit 
to  the  records  and  judicial  proceedings  of  every  other  state,  and  the 
legislation,  elsewhere  considered,  prescribing  the  manner  in  which 
such  records  and  proceedings  shall  be  proved,  and  the  effect  thereof.*"^ 

V.  BrJggs,  9  Mass.  464;  Ditson  v.  Dltson,  4  R.  I.  107;  Hood  v.  ITood,  11  Allou 
(Ma.ss.)  rJG;    Cooper  v.  Reynolds,  10  Wall.  308. 

ifs  Jones  V.  Jones,  108  N.  Y.  415;  15  N.  K.  707;  Rich  v.  Rk'b,  88  Hun,  500, 
34  N.  Y.  Supp.  854,  Blssell  v.  Briggs,  9  Mass.  4G4. 

100  People  V.  Baker,  76  N.  Y.  78;  O'Dea  v.  O'Dea,  101  N.  Y.  23,  4  N.  E.  110; 
Rl^ney  v.  Rigney,  127  N.  Y.  408,  28  N.  E.  405  (reversed,  on  another  point,  160 
U.  S.  .531,  K;  Sup.  Ct.  liVAi);  Williams  v.  Williams,  l.^.O  N.  Y.  193,  29  N.  E.  98; 
In  re  Kimball,  155  N.  Y.  02,  49  N.  E.  331;  Athertou  v.  Atherton,  155  N.  Y.  129, 
49  N.  E.  03."{;  People  v.  Karlsioe,  1  App.  Div.  571,  37  N.  Y.  Supp.  481. 
Also.  Cook  V,  Cook,  56  Wis.  1SK5,  14  N.  W.  33,  443.  Compare  the  dicta  in 
Maynard  v.  IIIll,  125  U.  S.  190,  8  Sup.  Ct.  72;{;  Cheely  v.  Clayton,  110  U.  S. 
701.  4  Sup.  Ct.  328;  Cheever  v.  Wilson,  9  Wall.  108;  Pennoyer  v.  NeCf,  95  U. 
S.  714,  7.34,  735. 

200  Article  4,  $   1. 

201  Anthony  v.  Rice,  110  Mo.  223.  19  S.  W.  423;    Iclt  v.  Kelt  (xN.  .1.  Ch.J  40 


FOREIGN    DIVOUCES.  45 

Effect  on  Dower. 

The  effect  which  a  divorce  granted  by  the  ronrts  of  a  state  haa 
upon  lands  of  the  husl)and  in  that  state  must  be  dclernjincd  by  its 
laws;  but  the  effect  whicli  it  has  upon  his  lands  in  anothor  state 
must  be  determined  by  the  laws  of  the  latter  state.  Thus,  if  a  divorce 
be  procured  in  Illinois,  on  the  j;;round  of  abandonment,  and  the  result, 
by  the  laws  of  that  state,  is  to  deprive  the  wife  of  dower,  she  is  not 
thereby  deprived  of  her  dower  in  lands  in  New  York,  where  such  a 
result  follows  only  from  an  absolute  divorce,  founded  on  the  one 
ground  recognized  therefor  in  the  latter  state.^°* 

Antenuptial  Contracts. 

A  discussion  of  the  effect  of  antenuptial  contracts  executed  in  one 
country,  upon  the  property  rights  of  the  parties  in  other  countries, 
will  be  found  in  the  cases  cited  below.^"^ 

Atl.  43G;  State  v.  Scblachter,  61  N.  C.  r.20;  Ditson  v.  DItson,  4  R.  I.  87; 
Harrison  v.  Harrison,  19  Ala.  40"J;   Beard  v.  Beard,  21  Ind.  321. 

202  Van  Cleaf  v.  Burns,  133  N.  Y.  540,  30  N.  E.  661.  See.  also.  Doerr  v. 
Forsythe,  50  Ohio  St.  726,  35  N.  E.  1055. 

20.-?  Long  V.  Hess,  154  III.  482,  40  N.  E.  335;  Fuss  v.  Fuss,  24  Wis.  256; 
Castro  v.  lilies,  22  Tex.  470;  Decouche  v.  Savetier,  3  Johns.  Ch.  (N.  Y.>  IIK). 


WK.ST    I'UBLISUINU   CO.,  PU1.STKB8  AND  STKKKOTYl'Ell.S,  8T.  PACL,  UI.NX. 


PRINCIPLES 


OK  THE 


LAW    OF    DAMAGES 


A  MONOGRAPH 


St.  Paul,  Minn. 

WEST   PUBLISHING   CO. 

1899 


Coi-Yinfun-.  1899, 

II V 

WEST  rU15MSIIl.N(i  COMPANY, 


DAlMAGi:S. 


DEFINITION   AND  NATURE. 

1.  Damag-es    are    the   pecuniary  reparation  -whicli  tlio  law 

compels  a  -wrongdoer  to  make  to  the  person  injured 
by  his  w^rong. 

\Vlu'i'('V('r  tlic  (■(•iiiiiion  law  I'ccn^xni/.cs  a  i'ii:ht.  it  also  ;_'i\«'s  a  nMiKnly 
for  its  violation.^ 

"Ubi  jiis.  ill!  iciiicdiiini."  'T^i^'lit"  and  "irimdy"  arc  <orr«'lative 
tcnns.  KniiiMlics  arc  cithci-  jutsciiijnc  of  t  In  catiMicd  w  idii;.'s.  or  re 
drcssivc  of  wronjis  comiiiitlcd.  Kcdicssivc  remedies  may  alVoid  s|MTiti<- 
r«'Ii('f,  as  wlicrc  one  is  eoniitelled  lo  do  flic  very  tliiii<i  he  agreed  to 
do,  or  they  may  alTord  nu  rely  a  |m  eiiniary  rejiaralion.  as  where  a  money 
award  is  p^lvcu  in  lieu  of  the  liiinj;  aj^rced  lo  lie  done.  Cnnunonlaw 
renuHlics.  with  few  except  i(»ns.-  are  of  the  laiter  kind.  I'or  most 
M  lon^s.  an  awaid  of  a  jiecnniai'v  rcronipensc  is  tlic  sole  remedy 
atforded.  I-lqnily  may  j>i(\ciii  llirealeiied  \\roii;_'s  liy  injunction.  <»r 
afford  specilic  relief;  l»nt  at  common  law  almost  the  sole  power  of  the 
court  is  to  make  and  enfone  a  money  jud;;nicnt. 

THE  THEORY  OF  DAMAGES. 

2.  The   theory  upon  -which  damages  are  awarded  in  civil 

actioi\s  is  that  they  are  an  indemnity  to  the  person 
injured,  not  a  punishment  to  the  wrongdoer. 
EXCEPTION — Where  a  tort  is  accompanied  by  circum- 
stances of  fraud,  gross  negligence,  malice,  or  oppres- 
sion, exemplary  damages  are  sometimes  awarded 
as  a  punishment  to  the  offender. 

18  Bl.  Conuu.  p.  li::?.  c.  ^;  Asliby  v.  White.  1  Salk.  1!>.  21.  Y.Tt.-  v.  .(..yr.-. 
11  .Tohus.  (N.  Y.)  130.  140. 

-  Keplevin,  ilotiuue.  ejectment,  proceedinps  to  recovi-r  dower,  nbntenient 
of  uuisance.  quo  warranto,  mandamus,  pro)iil)ition,  liaU-as  e.rpus.  estn-jM*- 
CHAP.DAM.— 1 


l).\MA(ii:8. 


Compfuaatinii  f1u  Ri(h\ 

("oinponsation  is  tlic  fniKlnni('iit:il  niid  :ill  jx^rvnsivc  ]»riii(iiili'  <:()voni- 
ini;  the  award  of  dainajxcs.' 

(■(Hii|ifiisa(i(>n.  not  i'«'sliliiii»»ii.  vuliic.  not  cohI,  is  tlic  iiicasnic  of 
i.'li.f/ 

\\'iR'tluT  the  action  be  ex  contiactn  or  ox  delicto,  the  end  in  view 
is  the  same, — that  phiintitV  be  made  whole.  "In  civil  actions,  the  law 
awards  to  the  party  injmed  a  just  indemnity  for  the  wrong  which  has 
been  done  him.  and  no  more,  whetlier  the  action  be  in  contract  or 
tort.  Except  in  those  si)ecial  cases  where  punitory  damajjes  are  al- 
lowed, the  impiiry  must  always  be,  what  is  an  adeipiate  indemnity  to 
the  i)arty  injured?  And  the  answer  to  that  (piestion  cannot  be  affected 
by  the  form  of  action  in  which  he  seeks  his  remedy."  In  an  action 
for  liivach  of  contract  of  carriage,  'Svhat  the  ]>assengcr  is  entitled  to 
rec«)ver  is  the  difference  between  what  he  ought  to  have  had  and 
what  he  did  have."  "> 

Damages  for  breach  of  conliact  are  not  limited  by  the  consideration 
paid." 

Mewsure  of  Damages. 

(a)  The  measure  of  damages  in  actions  for  conversion  is  ordinarily 
the  market  price  of  the  property  converted,  at  the  time  and  pluce  of 
conversion,  with  interest. '^ 

ment,  and  the  obsolete  Idcvia  iuitiiii>:intia.  Soo  1  Co.  T.itt.  KMta;  Story,  Eq. 
Jur.  {IS  T.'JO,  SL>.^). 

3  Fllliter  v.  I'liippunl.  T-  Im-.  -01.',  '_'(M,  11  Adol.  &  E.  (N.  S.)  347,  350;  Siiiilh 
V.  SherwfKxl.  '1  Tc.x.  4<;o;  (Jriffln  v.  Colvcr,  K!  N.  Y.  480;  Mechcni.  Cas.  Dam. 
74;    H()l)liison  v.  Ilaniiaii.  1  Exch.  S.'>0. 

*  Pol.  Torts,  c.  5,  citing  Wliltiiani  v.  Kerslwiw,  IC  Q.  U.  l>iv.  (ii:?.  See,  also, 
SiiHl  V.  Insurance  Co.,  4  Dall.  (U.  S.)  430;  Quimi  v.  Van  IVlt.  m  N.  Y.  417. 
<T.  Waters  v.  Lnin»)er  Co.,  115  N.  C.  (>48,  20  S.  E.  71.S.  In  an  action  in  tort  for 
wroiiKfnl  coiivcrKlon  <if  notes  intrusted  to  tlie  defendant  under  a  contract 
whidi  defendant  lias  violated  by  the  ndsai>i»n>l'i"iation.  lie  cauMrit  resort  to  the 
contract  Ibus  abaiidoned  to  eslablisli  the  measure  of  d.im.iu'es.  llynes  v. 
I'atterHon,  ;>5  N.  V.  1.  <». 

6  HobliH  V.  Kalirnad  Co..  L.  IC.  lo  (^  I',.  Ill,  IIIO. 

«  Qulnn  V.  Van  Telt,  .5);  N.  V.  117;    Hennelt  v.  Buchan,  01  N.  Y.  'I'l'l. 

7  Si)icer  v.  Waters,  (n5  Harb.  (X.  V.)  L"J7;  Allen  v.  Dykers.  .'{  Hill  (N.  Y.) 
hm\  rhlllli)H  V.  Speyers,  41)  \.  V.  ^'^y-',:  'J'yng  v.  Warehouse  Co.,  58  N.  Y.  308; 
I'arm.-nter  v.  Eitz|.atrick,  i:'..".  N.  V.  l!»o,  .'U  N.  E,  lo:{2;  Ilawyer  v.  Bell.  141 
N.  Y.  140.  30  N.  E.  0;   Oruisby  v.  Mining  Co.,  50  N.  Y.  Gli3;    Fowler  v.  Merrill, 


THK    TIIi:(»riY    OF    I)AMA<;i:s.  .J 

Tn  an  .Mfjioii  for  rfnivrisioii  of  blocks.  Ilic  incasiiic  of  (];niia;:i's  in 
sonic  jui'isdiclions  is  the  lii;;li<'st  value  iiilcriiu'dijilc  the  convcrHion 
and  flic  end  of  (lie  li-ial;  wliiif  in  oIIhts  tlic  measure  is  the  lii;:ln-st 
price  readied  williin  a  ie;(soii;ililc  titni'  afler  liir  |ilaiiitilV  liail  learm-d 
of  the  conversion.  The  hilter  view  is  adopted  in  New  ^'ori^;"  and 
in  tlie  United  States  supreme  court ;  '  and  in  I'eiinsyivania  if  there  \\as 
a  trust  relation  between  tlie  parties,  and  justice  <annol  be  reache<l  l»y 
the  ordinary  measure  of  damages.^" 

In  an  action  for  eonversion  of  bills  and  notes,  the  amount  appear- 
ing to  be  unpaid  thereon  at  the  time  of  the  conversion,  with  interest. 
is  prima  facie  the  measure  of  damages;  but  this  may  be  i-educed  by 
showing  invalidity,  paj'ment.  or  insolvency  of  the  ni:ii<er." 

(b)  Tn  an  action  of  re})levin,  it  was  held  in  Suydani  v.  .b'id<ins  '-  tiiar 
the  damages  recoverable  were  the  same  as  in  trover.  The  plaint ilT. 
if  successful,  is  entitled  to  compensation  for  the  taking  and  detention. 
The  defendant,  if  successful,  and  if  the  goods  are  returned,  is  entitled 
to  like  compensation.  If  the  defendant  does  not  befoi-e  trial  retpiire 
the  return  of  the  property,  and  it  is  sold,  the  defendant,  if  successfid. 
is  entitled  to  recover  what  it  was  woilli  ai  the  lime  of  the  trial,  and 
the  value  of  its  use  during  the  time  of  its  detention;  but,  if  he  buys 
it  in  at  the  sale,  he  is  entitled  to  the  value  of  the  proi»ei'ty.  and  interest 
thereon  from  the  time  is  was  taken  to  the  time  of  th'-  trial.'"' 

(c)  The  measure  of  damages  in  an  action  by  a  vendee  against  a  ven 

11  How.  375;  Barry  v.  Bennett.  7  Mete.  (Mass.)  :\:>4;  VMk  v.  I-lct.luT.  IS  (;. 
B.  (N.  S.)  403;  Lyou  v.  (Jormley,  .">:{  Pa.  St.  2(Jl;  Jenkins  v.  .MeCi.nieo.  2r,  .Ma. 
213. 

8  Baker  v.  Drake.  53  N.  Y.  211;  Wright  v.  Bank,  llo  N.  Y.  •j:;7.  is  N.  E. 
79.  Compare  Barnes  v.  Brown,  130  N.  Y.  .'^2.  2U  N.  K.  7f^).  Ami  see  .Smith 
V.  Savin,  141  N.  Y.  315.  3(i  X.  E.  338. 

9  Galigher  v.  .Tones.  120  U.  S.  103,  9  Sup.  Ct.  3.".5,  wliere  tlie  various  authori- 
ties are  reviewed. 

10  Huntingdon  &  B.  T.  K.  cV-  C.  Co.  v.  I-:n-lish.  SO  Ta.  St.  247.  .\nd  »c€ 
In  re  Jamison  &  Co.'s  Estate,  103  Ta.  St.  143,  29  Ad.  lOol;  c;ali;:lu'r  v.  Jones. 
129  U.  S.  193,  9  Sup.  Ct.  335. 

11  Griggs  V.  Day,  136  N.  Y.  160.  32  N.  E.  612;  Stevens  v.  Wiley.  H>o  Mass. 
402,  43  N.  E.  177;  Latham  v.  Brown,  IG  Iowa.  118;  3  Piirs.  Notes  A:  iJ.  1\*>k 
Cf.  Booth  V.  Powers,  56  N.  Y.  22. 

12  3  Sandf.  (N.  Y.)  614. 

13  Ditmars  v.  Saclcett,  81  Hun,  319,  30  N.  Y.  Supp.  721;  3  Pars.  Cout  p. 
202. 


4  DA  MACKS. 

dor  (if  ]»('rsoiiMl  properly,  for  liiiadi  of  the  contract,  is  stated  and  dis- 
cussed in  TilT.  Sales,  §  127  et  scii.'* 

(dl  The  measure  of  daniajies  for  Itreach  of  warranty  is  tlie  dilTerence 
between  the  actual  value  of  the  article  and  its  value  if  it  had  conformed 
wiih  the  warranty,  and  not  the  difference  between  its  pnichase  piice 
and  the  actual  \alue.''' 

(e)  The  measure  of  damaj^es  in  actions  by  a  vendor  of  personal  prop- 
erty against  a  vendee  is  stated  and  discussed  in  Tiff.  Sales,  §  123  et 
seq.'" 

(f)  Where  a  breach  of  contract  by  one  party  prevents  performance 
by  the  other,  the  latter  is  entitled  to  recover  the  amount  of  exi)ense9 
which  he  has  properly  iucuired  in  ])rei)arin^-  and  providiu};-  for  per- 
formance, and  which  were  naturally  to  be  anticipated.^^ 

If.  under  a  contract  for  specified  work  at  a  specified  price,  the  de- 
fendant prevents  the  plaintilf  from  completing  the  work,  the  plaintiff 
may  recover  foi-  the  work  done  in  ]>roportion  to  the  ratable  cost  of 
that  ]»ortion.  and.  for  the  work  picvented.  the  piolits  he  has  lost 
thereon.^" 

(g)  In  some  states,  in  an  action  of  ejei-tmenl  to  recover  the  posses- 
sion of  land  wrongfully  held  by  another,  no  damage  for  tlie  wrongful 
detention  can  be  recovered.*" 

To  recover  his  substantial  damages,  the  ]ilainlitr  must  resort  to  a 
subsequent  action  of  ti<'spass  for  mesne  piolits.-" 

i«  See,  also,  Theiss  v.  Weiss,  IGG  Pa.  St.  9.  Ml  Ail.  •;:>,. 

1'  r.irk  V.  Furnace  Co..  M  Wis.  ISO.  (i4  \.  W.  s.V.»:  Slmrpo  v.  Bottis  (Ky.) 
:',-2  S.  W.  .^!».");  Iliiiu'S  v.  Kiclii.  l."il  I'm.  SI.  I'.in.  -j:,  All.  f,:;j:  o^dcn  v.  Hoalty, 
l.'!7  I'a.  St.  1!»T.  l'i>  Atl.  C.l'O;  Carntil-rorlcr  Hoiler  &;  Tank  ("<>.  v.  Coliiinlms 
.Macli.  Co.,  'j  C.  C.  A.  I'.K),  ."»  Fe<l.  4r>l ;  liacli  V.  Levy,  lol  N.  V.  r>11.  ."•  .N.  K. 
345;  Beeuian  v.  Haiit;i.  US  N.  Y.  5;{S.  i'?  .\.  K.  SS7;  Swain  v.  S<lii.tr.'lin.  VM 
S.  Y.  471,  ;U  N.  E.  lOL'.-,;  Wliito  v.  MllliT,  71  N.  Y.  IIS.  7S  N.  Y.  ."".i.;.  Hut  see 
.FoncK  V.  KosK,  '.)H  Ala.  44.S,  l.*^  South.  .319. 

i«  See,  also.  Tufts  v.  Cn-wcr,  s:\  Me.  407,  22  Atl.  .382;  Todd  V.  Oanible.  148 
.\.  Y.  .'W2.  42  N.  K.  !»SL':  M.-ison  v.  Decker.  72  N.  Y.  .V.».".:  iMistan  v.  McAn- 
(irew.  44  N.  Y.  7S;  '{"uris  v.  Bennett.  l(i:{  Mass.  :;<.is.  40  N.  10.  172;  Van 
I'.riM'klen  V.  Snif.'iilic,  Mo  .N.  Y.  7."),  :'^>  N.  K.  41.").  But  sec  (Jordoii  v.  Norris, 
);»  .\.  H.  .37(1. 

IT  Bernstein  v.  Meech,  1.30  .\.  Y.  .3.":>,  29  N.  E.  2."..";  Friedl.niil  v.  Myers, 
1.39  N.  Y.  4.38,  34  N.  E.  IO.m. 

I'lKehoe  v.  Borouph  of  Kutlifrfonl.  .".<;  X.  .1.  bnw.  2.3.  27  All.  '.tl2. 

19  (Joodtitie  V.  Tombs.  3  Wlls.  118;    Ilurvey  v.  Snow,  1  Yealcs  (Pa.)  l.'iC). 

20  MltcbeU  V.  Mitchell,  1  Md.  55. 


TIIK    TIIKdKY    OF    DAMACKS.  .•) 

But  in  other  states  the  possession  and  dainaRes  for  Iho  (Iclciilioii 
are  recovered  in  one  action, — either  ejectment,-'  or  trfspaHM  td  trv 
title,'--  or  in  a  similar  statutory  action. 

In  both  cliisscs  of  states  the  mcasui'r  of  (i;iiii;i;,'*'s  is  tlic  «;iiiie.  It  is 
the  annual  value  <»f  the  ])reuiises;  - '  not  wliat  the  o(iii|i;iiii  aciuiilly 
received,  but  what  should  have  been  i-eceived.-' 

The  defendant  may  deduct,  from  the  miuoumi  reciivt-d  ;is  tin-  income 
of  the  land,  necessary  expenses  paid  Ity  him.  such  as  taxes,-''  and  re- 
pairs.-" 

When  the  occupant  has  made  \ahialth'  improxcmeiits  on  the  land, 
which  will  be  a  benefit,  their  value  may  be  set  ofif  against  the  hitter's 
claim  for  damages. ^^ 

The  improvements  must  have  been  made,  however,  by  one  wIkj  acted 
in  good  faith,  believing  that  he  had  title  to  the  land,  oi-  no  allowance 
will  be  nuide.-^ 

The  j)laintiff,  in  an  action  for  mesne  profits,  may  recover  damages 
from  the  time  his  right  to  possession  accrued,^"  up  to  the  time  the 
defendant  gives  up  the  possession.*" 

21  Couipton  V.  The  Chelsea,  139  N.  Y.  538,  34  N.  E.  1090.  in  which  the  New 
York  statutes  (Code  Civ.  Proc.  §§  1490,  1497.  1531),  and  other  provisions.  In- 
cluding those  relating  to  treble  damages  in  certain  cases,  are  discussi'd. 

2  2  Boyd's  Lessee  v.  Cowan,  4  Dall.  138;  Battln  v.  Bigelow.  Tot.  C.  C.  4.7J. 
Fed.  Cas.  No.  1,108. 

23  New  Orleans  v.  Gaines,  15  Wall.  624;  Larwell  v.  Ptevens.  12  Fed.  559; 
Woodhull  v.  Rosenthal.  CI  N.  Y.  382;  Taylor  v.  Taylor.  43  N.  Y.  57S:  Ege  v. 
Kille.  84  Pa.  St.  333. 

2  4  Woodhull  V.  Rosenthal,  61  N.  Y.  382;  Campbell  v.  Brown.  2  Woo<ls. 
349.  Fed.  Cas.  No.  2.35.').  But  see  Rabb  v.  Patterson,  42  S.  C.  528.  20  S.  E. 
540;   McMahan  v.  Bowe,  114  Mass.  140. 

2  5  Wallace  v.  Berdell,  101  N.  Y.  13.  3  N.  E.  7(>9;  Ringhouse  v.  Keener.  63 
111.  230:   Semple  v.  Banlc.  .">  Sawy.  394.  Fed.  Cas.  No.  12.660. 

26  Semple  v.  Bank.  5  Sawy.  394.  Fed.  Cas.  No.  12.r>e.0.  And  see  Ewalt  v. 
Gray.  6  AVatts  (Pa.)  427. 

2T  Green  v.  Biddle.  8  Wheat.  1;  Woodliull  v.  Rosenthal,  f.l  N.  Y.  39«V. 
Bedell  v.  Shaw.  .")9  N.  Y.  46;  Jackson  v.  Loomis.  4  Cow.  iN.  Y.)  l""^^;  Ilodg- 
kiiis  V.  Price.  141  Mass.  162,  5  N.  E.  502. 

2s  Campbell  v.  Brown,  2  Woods,  349,  Fed.  Cas.  No.  2.355;  Dothage  v. 
Stuart,  35  Mo.  251;    Code  Civ.  Proc.  N.  Y.  §  1531. 

2»Danziger  v.  Boyd,  120  N.  Y.  628.  24  N.  E.  482;  Clark  v.  Boyreau.  14 
Cal.  634. 

-io  Danziger  v.  Boyd.  120  N.  Y.  628.  24  N.  E.  482;  Gilnian  v.  Oilman,  111  N. 
Y.  265,  18  N.  E.  849;    Mitchell  v.  Freedley,  10  Pa.  St.  198. 


G  DAMAiiKS. 

This  is  the  rule  in  liic  Mbscuce  of  soiuo  staliilc  of  limitations  applica- 
ble to  such  actious.^^ 

But  in  most  states  the  right  of  recovery  is  limited  to  a  few  years 
before  the  action  is  bepm;  ^^   jjenerally,  six  years.^' 

Wht'ic,  owinfj  to  the  technical  form  of  the  action  of  ejectment,  no 
costs  were  recovered,  they  may  be  made  a  part  of  the  damages  in  a 
subsequent  action  for  mesne  profits.^* 

In  England,  reasonable  counsel  fees  in  the  ejectment  action  may 
be  recovered. *'' 

The  same  has  been  held  in  this  country  in  some  cases,^^  and  denied 
in  others.^^ 

(h)  Damages  for  detention  of  dowser  w^ere  first  made  recoverable 
by  the  statute  of  Merton;^^  and  the  subject  is  largely  regulated  by- 
statute  in  the  United  States.'^ 

The  amount  of  damages  is  computed  on  the  same  basis  as  for  the 
detention  of  real  property  in  other  cases;  that  is,  the  net  value  of 
the  land.  But.  in  the  case  of  a  widow  suing  for  detention  of  dower, 
only  one  third  of  the  husband's  whole  estate  is  recoverable,  that  being 
the  .share  of  her  husband's  land  to  which  she  is  entitled  by  the  com- 
ni(m  law.*" 

31  New  Orleans  v.  Caincs.  15  Wall.  G24. 

82  Gatton  V.  ToUey,  2li  Kan.  678;  Ringhouse  v.  Keener.  63  111.  J.'.o.  Rut  see 
Budd  v.  Walker,  9  Barb.  (N.  Y.)  493;  Gaslight  Co.  v.  Rome.  W.  &  o.  K.  Co., 
51  Ilun.  119,  5  N.  Y.  Supp.  450. 

33. Jackson  v.  Wood,  1^4  Wend.  (\.  Y.)  443;    Hill  v.  .Myers.  4(;  I'.i.  Si.  1.".. 

3*  Baron  v.  Abell,  3  Johns.  (N.  Y.)  481;  Pearse  v.  Coaktr.  L.  K.  4  Kxch. 
[)2.  But  .see  Hunt  v.  OWiill,  U  N.  .T.  I.iiw,  564;  Doe  v.  Killiter,  13  Mees.  & 
W.  47. 

86  1)06  V.  Htldd.-iil,  4   I»o\vl.    i:;7. 

86  Doe  V.  Perkins,  s  1',.  Mcii.  iKy.)  1!tS;  Dm  v.  Chubb,  1  N.  .T.  Law,  466. 
.\iid  see  Gll)son,  C.  .7..  in  .Mi-xuiidci-  v.  lien's  lOx'rs.  11  Pa.  St.  .■»;{7.  .".39. 

37  Ilerreshoff  v.  Tripp,  15  U.  I.  92,  23  All.  104;  White  v.  Clack.  2  Swan 
"Tenn.)  2."M);   Alexandt-r  v.  Ilerr's  Kx'rs,  11  I'm.  Si.  ,5.37. 

-"20  Hen.  III.  c.  1. 

30  See  1  Stlm.  Am.  St.  Law,  §  .327S;  2  Sciii).  Dower  (2il  Kd.)  700;  :{  Pars. 
Cont.  222;    Co<le  Civ.  Proc.  N.  Y.  §  1600. 

«o  Rea  V.  Ilea,  63  Mieh.  2.'.7.  29  N.  W.  7o:;:  Henderson  v.  Chaires,  35  Fla. 
423,  17  South.  .574;   StuU  v.  Grahaui,  60  Ark.  461,  31  S.  W.  46. 


TIIK    THKOIIY    OK    DAMAflKS.  » 

(i)  AgainsI  an  aliciicc  (if  (lie  Inisliaiid,  dama^^'fs  can  onl.v  In-  n-cov- 
ered  from  the  liiin'  of  (Innaiid.^' 

As  to  au  alk'iK'c  of  the  licir,  tlic  iiilc  is  iiol  miif(»iiii/^ 

Market  Value. 

The  inarki  t    value  is  llie  fail-  casli   value  if  sold   in   ilic  uiaikct    f-u 
cash,  and  not  on  lime/  ' 

A  single  sale  will  not  usually  establish  a  markri  value** 

Value  in  Nearest  Market. 

Where  there  is  no  market  for  the  article  at  the  jdace  where  its 
value  is  to  be  estimated,  the  value  at  the  nearest  market  is  taken  as 
a  basis,  and  an  allowance  is  made  for  the  cost  of  transpoitation.  the 
object  being  to  ascertain  the  real  value  at  the  place  of  compeiisa 
lion.*"* 
Value  of  Property  in  Course  of  Manufacture . 

The  value  of  articles  partially  manufactured  is  the  value  they  would 
have  when  completed,  less  the  cost  of  completing  them.-'° 

(j)  Interest  should  be  allowed  as  damages  wlunt  vn  il  r<  presents 
a  loss  proximately  caused  by  defendant's  wrong.*' 

41  McClanahan  v.  Poitor.  10  Mo.  74G;  Thrasher  v.  Tyack.  !."»  Wis.  2.')t5.  That 
no  damages  are  recoverable,  see  Sharp  v.  Pettit.  3  Yeatos  (Pa.)  :'.S;  «;:inn(.n 
V.  Widman,  3  Pa.  Dist.  R.  835;   Marshall  v.  Anderson.  1  B.  Moii.  (Ky.)  Pas. 

42  As  holding  damages  recoverable  from  husband's  death,  see  2  Scrib. 
Dower  (2d  Ed.)  715;  Seaton  v.  Jamison,  7  Watts  (Pa.)  ."►;«:  nitcbco«-k  v. 
Harrington,  (i  .Johns.  (N.  Y.)  290;    from  demand,  2  Scrib.  Dower  (2d  Ed.i  714. 

43  Brown  v.  Railway  Co..  125  111.  fKM).  18  N.  E.  283;  Sloan  v.  Baird.  12  \yv. 
Div.  483,  42  N.  Y.  Supp.  38. 

4  4  Graham  v.  Maitland,  1  Sweeney  fN.  Y.)  149.  But  see  Parmentrr  v. 
Fitzpatrick,  135  N.  Y.  190,  31  N.  E.  H>32. 

/sBidlard  v.  Stone,  G7  Cal.  477,  8  Pac  17:  Furlong  v.  PoUeys.  30  Me.  491: 
Rice  V.  Manley,  GO  X.  Y.  82;  AVemple  v.  Stewart.  22  P.arl).  (N.  Y.)  154;  Graip! 
Tower  Co.  v.  Phillips.  23  Wall.  471. 

46  Emmons  v.  Bank,  97  Mass.  2^30. 

47  For  a  discussion  of  this  subject,  and  a  reference  to  the  atuhorities.  see 
the  monograph  on  "Interest  and  Usury." 


o  DAMAIIKS. 

WRONG  AND    DAMAGE. 

3.  Wheuever   a    legal    rig-ht   is    violated,    and   only  then, 

damages  may  be  recovered. 

^''Dxinnuiii  Ahsqiu?  Injuria — hiJKi'id  f<hie  Damnoy 

The  term  "tlainiimn  absciue  injuria"  is  apfilicd  to  cases  where  a 
pcisoii  sntVcis  act  mil  (laiiKiiic  liul  not  in  a  sense  recoj;iiized  by  the 
law  as  cuuslimtiui;;-  an  injiirv  enlillin^-  liini  to  a  cause  of  action  for 
relief.-'* 

Tlic  term  ••injuria  sine  dainno"  is  apidied  lo  cases  where  an  injury, 
in  a  lej^al  sense,  is  sutfered.  Itui  wliere  there  is  in  fact  no  actual  dani- 
a<;e.     Here  nominal  danuijijes.  and  nothinj;-  nuire,  may  be  recovered/" 

Not  every  damage  in  fact  is  daiuaue  in  law.  To  sustain  an  action 
for  damages,  the  violation  of  a  le<»al  ri^lit  must  be  shown.'''' 

For  every  violation  of  a  Ic^al  ri.ulit.  daniaues  may  be  recovered.'^* 

PROXIMATE  AND  REMOTE  CONSEQUENCES  IN  GENERAL. 

4.  For  purposes  of  liability,  the  consequences  of  -wrongful 

conduct  may  be  divided  into 
(a;  Proximate  consequences,  and 
(b)  Remote  consequences. 

<8  Hague  V.  Wheeler.  IT)?  Pa.  St.  .'{24.  27  .Ml.  714:  Tiilliot  v.  Kailn.ad  (".).. 
151  N.  Y.  KC.  43  X.  E.  .'W2;    Phcliis  v.  Nowlon.  72  N.  Y.  3!). 

<oFullani  v.  Stearns.  ;{()  Vt.  44;{;  Mayne,  Dam.  §  U;  Paul  v.  Slasoii.  22  Vt. 
231;    Little  v.  Stanback.  (;;i  N.  C.  285;    Francis  v.  Schoellkopf,  53  N.  Y.  I.VJ. 

60  Wt'ljb  V,  Manufacturing,'  Co.,  3  Sumn.  ISO,  Fed.  fas.  Xn.  17.:]22:  and 
-Mcchem.  Gas.  Dam.  3.  "A  Icjjal  right  nuist  be  iuvailrd  in  onlcr  iliai  .m  action 
of  tort  may  be  maintained,  'i'lic  mere  fact  that  a  coiuplainant  may  iiavc 
Buffered  a  damage  of  tlie  kind  wliicli  tlie  law  recognizes  is  not  enougli.  Tlicre 
must  also  Ik*  a  violation  of  a  duly  n-cognized  liy  law.  In  Ilic  language  of  tlie 
civil  law,  mere  damage  is  not  enough;  tliere  nuisi  also  lie  injuria."  .lag. 
'J'orts,  .S7;  .Tessell,  M.  It.,  in  I  "ay  v.  Brownrigg.  !(►  (Mi.  Div.  2!M.  304.  See, 
also.  Hacklu.use  v.  Itonomi.  !>  II.  L.  Tas.  .503;  Salvin  v.  Coal  Co.,  9  Ch.  App. 
70.5;  Uogers  v.  Dutt.  i:i  M(M»i-e.  P.  C.  'JOJ>:  Kieh  v.  Haiiroad  Co..  S7  N.  Y.  3S2: 
Tall.ot  V.  Kailroad  Co..  ir>l  N.  V.  1(;2.  I.'.  .\.  I).  .■•.S2;  Lord  Kenyon.  C.  J.,  in 
Pasley  V.  Fn'cman.  .''>  Teini   K.  51.  C.;. 

•'-1  \Vel»b  V.  Manuf.-icturing  Co.,  3  Snnin.  IS'.t,  I'eil.  Cas.  No.  17.322;  and 
Mechem,  Cas.  Dam.  3. 


DirtKCT    AM)    CONSKCiUKNTIAL    I.OSSKS.  v' 

5.  Compensation  may   be    recovered    only    for    proximate 

losses  resulting  from  ■wrong'ful  conduct,  and  never 
for  any  losses  "which  are  remote. 

Thouj^h  compensation  is  tlic  tlioory  and  aim  (if  \\\r  l;i\\  in  awarilin;: 
daninf^os.  every  eons(H]u<'nce  of  a  wroii*:;  is  not  an  rlcmcni  in  lin-  raliii- 
lation  of  wliat  is  Ic^^al  coin jicnsat ion.  A  pei-son  wron^jcil  can  iccdvcr 
compensation  only  for  tlie  direct  of  proximate  conseipn-nc  i  s  of  tin' 
wronj;.  To  hold  one  liable  for  all  the  consccpiences  of  a  wron^'fiil  a<t 
''wonld  set  society  on  ed^e,  and  fill  the  courts  with  useless  and  injii 
rious  litiji'ation."  "'- 

The  distinction  of  proximate  from  remote  conscfiin-nccs  is  neccssai-y 
— First,  to  ascertain  wiietlier  there  is  any  liability  at  all:  and.  stMond. 
if  a  wronfj;  is  establi;i;hed  for  which  the  defendant  is  liable,  to  lix  the 
limit  of  liability  or  measure  of  damages.''^ 

DIRECT  AND  CONSEQUENTIAL  LOSSES. 

6.  For  the  purpose  of  determining  what  consequences  are 

proximate   and   -what   remote,  the  losses  caused  by 
a  wrong  may  be  divided  into 

(a)  Direct,  and 

(b)  Consequential  losses. 

7.  Direct  losses  are   such   losses   as   proceed  immediately 

from    wrongful   conduct,  w^ithout   the    intervention 
of  any  intermediate  cause.  ' 

52  Fleming  v.  Beck.  48  Pa.  St.  309,  ;Ji:5:    Squire  v.  Telf!.M-ai)h  ("i...  9S  .Mass. 
232;    Cutting  v.  Railway  Co.,  13  Allen  (Mass.)  ;iSl:    Fox  v.  Ilanllug.  7  Cush. 
(Mass.)  51(5;    Le  Peintur  v.  Kaihvny  Co.,  2   Law  T.   (N.   S.i    ITO;    .Ionian    \ 
Patterson.  67  Conn.  480,  35  Atl.  521. 

5  3  Pol.  Torts.  27.  "The  question  as  to  what  is  the  direct  or  proxima- 
cause  of  an  in^"ury  is  ordinarily  not  one  of  science  or  legal  knowledge.  Jiui 
of  fact,  for  a  jury  to  determine  in  view  of  the  accompanying  circumstances." 
Schumaker  v.  Railroad  Co..  4G  Minn.  39.  48  X.  W.  559:  Moulton  v.  Inha1»itants 
of  Sauford,  51  Me.  127.  134.  See.  also.  Dole  v.  Insurance  Co..  2  Cliff.  4.*?!. 
Fed.  Cas.  No.  3.9<;0;  Baltimore  &  P.  R.  Co.  v.  Reaney.  42  Md.  117;  Sutton 
V.  Town  of  Wauwatosa,  29  Wis.  21.  But  see  .leffersinville.  M.  &  L.  U.  L- 
V.  Riley,  39  Ind.  508;    Gates  v.  Railroad  Co..  39  I-twa.  45. 

54  Schumaker  v.  Railroad  Co.,  40  Miuu.  39,  4S  N.  W.  559. 


10  DAMAGES. 

8.  Direct  losses  are  necessarily  proximate,  and  compensa- 
tion therefor  is  alw^ays  recoverable. 

I h  I't  <-t    /,4>K.St',S. 

A  i<iit  fojisor  is  liable  for  ;ill  injiirirs  rcsultinjr  directly  from  his 
wioiiufiil  net.  mIkMIici-  thc.v  ((Mild  (ir  ((uild  not  Iimvc  hfcii  foreseen  by 
iiiiii.    ■ 

l>irect  (•onse(|iieiices  are  necessarily  ]tro\iniat('.  One  is  conelusively 
jiitsiinied  to  intend  the  direct  consiMiiience  of  one's  acts.  Tluis,  it 
was  held  in  a  civil  action  for  assault,  where  defendant  had  intentionally 
kicked  plaintiff  on  the  lej;  dnring  school  lionrs,  though  he  did  not 
intend  to  injure  him.  that,  the  act  beiiit:  unlawful,  defendant  was 
liable  for  the  injury  wliidi  in  fact  resulnd.  lli(»u,i;h  it  could  not  have 
been  foreseen.'''^ 

So.  also,  a  sleepinj;-car  conijiany  is  liabk'  for  a  miscarriajic  caused  by 
the  wronjjful  expulsion  of  a  married  woman  from  a  berth,  tliouuli  its 
servants  were  ignorant  of  her  delicate  condition." 

In  actions  of  contract  the  rule  in  respect  to  direct  losses  is  the  same.^* 

6  8  Cogdell  V.  Yett,  1  Cold.  (Temi.)  l.*30;  T:illy  v.  Ayres,  3  Sneed  (Teiiii.i  ('.77; 
Bowas  V.  Tow  Lino,  2  Sawy.  21,  Fed.  Ca.s.  No.  1.713;  Perley  v.  Railroad  Co.. 
98  Mass.  414;  Brown  v.  Railway  Co.,  54  Wis.  342,  11  N.  W.  3.-><;.  JHl;  Sloan 
V.  Edwards.  CI  Md.  89;  Eten  v.  Luyster,  GO  N.  Y.  252.  Cf.  Allcu  v.  Mc- 
Conihc.  124  N.  Y.  347,  20  N.  K.  812. 

•''•»  Voslmrij  V.   IMitiicy.  Stt  U'is.  5i':',.  .'.0  N.  "\V.  4i>.".. 

••■  .M.imi  lioudolr-Car  Co.  v.  Duimv.  4  C.  C.  A.  .540.  54  Fed.  G40.  Contra, 
rnlliii:m  I'alace-Car  Co.  v.  lijirkcr.  4  Colo.  ;{44,  a  case  much  criticised,  and 
opposed  to  .'ill  the  other  authorities.  See.  also.  Campbell  v.  Car  Co.,  42  Fed. 
484;  Brown  v.  Railway  Co..  .54  Wis.  .342,  11  N.  W.  .35<;,  <H1;  Terre  Haute  & 
I.  R.  Co..  V.  Buck.  !h;  Ind.  .'54C,:  Lnpleiiie  v.  SUMiiisliip  Co..  40  La.  Ann.  WA,  4 
SotUh.  M75:  Baltimore  A:  L.  T.  Co.  v.  Cjisselj.  (,<;  .Md.  ll".t.  7  All.  805;  Elliott 
V.  Van  Bnreii,  Xi  Mich.  4!t;  .lewell  v.  Railway  Co..  55  .\.  11.  s»;  Stewart  v. 
City  (tf  Ripon.  .3M  Wis.  .584;  Cideman  v.  Railroad  Co..  Hm;  .Mmss.  KUt;  lire  v. 
Munn.  \H  .\.  V.  (i21 :  Brown  v.  Railway  Co..  54  Wis.  .342,  11  N.  W.  :^5ti.  911; 
lieaiicluinip  V.  .Minliif.;  Co.,  .50  .Midi.  If.;',.  15  N.  W.  <i5.  .See,  also,  e;ises  collected 
In  Clark  v.  Cli:imherH.  3  Q.  B.  I)iv.  .''.27.  17  Law  .1.  (>.  H.  127:  Cr.ine  Elevator 
Co.  v.  Lipp«-rt.  11  C.  C.  A.  521.  tUJ  Fed.  042.  "Where  a  disease  c.iused  by  the 
Injury  siipervenes.  as  well  as  where  the  disease  exists  at  the  time,  and  is  :i^j;ra- 
vate«l  by  It,  the  itlalntilT  Is  enlilled  to  liill  <•  iin|>cnsatory  (l;iiii;ii,'cs."  I/oiiisville, 
N,  A.  &  C.  Ry.  Co.  V.  Snyder.  117  In.l.   i:'.5.  'jo  N.  K.  2SJ. 

'"  Iladley  v.  Baxendale.  J>  i:\.ii.  :;n.  I'.iirr.il  v.  SmIi  Co..  11  .Midi.  34; 
J'.rown  v.  Ftister.  51  Ta.  St.  I<i5;  (dll;ird  v.  K.iilro.id  Co..  7  Hurl.  iS:  .\.  79; 
Williamu  v.  Vanderbill,  28  N.  Y.  217;    Smith  v.  iJailway  Co.,  3U  Minn.  109,  14 


IJIICIXT    AND    CONSKtiUKNllAL    I.OMHEa.  11 

SAME— CONSEQUENTIAL  LOSSES. 

9.  Consequential   losses   are   the   indirect  losses  caused  by 

a  ■wrong',  but  to  w^hich  some  intermediate  cause  has 
contributed. 

10.  Consequential  losses  may  be  either 

(a)  Proximate,  or 

(b)  Remote. 

11.  PROXIMATE     AND     REMOTE     CONSEQUENTIAL 

LOSSES — Consequential  losses  are  proximate  when 
the  natural  and  probable  effect  of  the  wrongful 
conduct  under  the  circumstances  is  to  set  in  opera- 
tion the  intervening  cause  from  w^hich  the  loss  di- 
rectly results.  When  such  is  not  the  natural  and 
probable  effect  of  the  w^rongful  conduct,  the  losses 
are  remote. 

Consequential  Losses  in  General. 

"A  loss  which  is  the  immediate  result  of  a  wronj;  Is  railed  a  '(lin-rt 
loss';  one  that  is  an  imlirect  result  of  the  wrouj;  is  railed  a  'coiisequeii 
tial  loss.'  "  ^» 

For  example,  where  a  fence  is  destroyed,  loss  of  the  fence  is  the 
direct  result.  Loss  of  the  crops  by  reason  of  trespassing;  cattle  entei' 
ing  at  the  gap  is  indirect  or  consequential.  Conseijuential  losses  differ 
from  direct  losses  in  this:  Tliat  some  intermediate  cause  has  contrili 
uted  to  the  injury.  Whether  or  not  compensation  can  be  recovered 
for  such  losses  will  depend  on  the  nature  of  the  intervening  <-ause. 

N.  W.  797;  Rhodes  v.  Baird,  IG  Ohio  St.  'iSl;  Bray  ton  v.  Chase.  3  Wis.  4.'»i; 
Bridges  v.  Stickuey,  38  Me.  361;  Paducah  Lumber  Co.  v.  Paducah  Water-Sui' 
ply  Co.,  SO  Ky.  340.  12  S.  W.  554,  and  13  S.  W.  240;  Louisville.  N.  A.  &  C.  i:> 
Co.  V.  Sumner.  lOG  Ind.  55,  5  N.  E.  404;  Houser  v.  Peareo.  13  Kan.  1(>4.  S. . 
I'lDsser  V.  Jones,  41  Iowa,  674;  McHose  v.  Fulmer,  73  Pa.  St.  3(55:  \Vilkins««;i 
V.  Da  vies,  146  N.  Y.  25.  40  N.  E.  501;  Collins  v.  Stephens.  58  Ala.  543;  Colin 
V.  Norton.  57  Conn.  480,  4tr2,  IS  Atl.  5it5;  Kenrig  v.  Eggleston  (lii4S|  Ale.vn.  JC; 
Little  V.  Kailroad  Co..  60  Me.  239.  See,  also,  Mather  v.  Express  Co.,  138  Mass. 
55;  Starbird  v.  Barrows,  62  N.  Y.  615. 
68  Sedg.  Dam.  J  HI- 


I-  I)  \  MA  (IKS. 

I'roxiiii.ilt'  cnnsctpiciircs.  Ilicn  foic.  air  siiiiplv  (liosc  (lial  arc  natural 
and  |ir<»lial»lr."" 

W'lirilici-  (ir  not  a  <^\vi'n  result  is  naluial  and  probable  is  Inr  I  Ik* 
juiy.* 

Thr  rulr  <if  naiuial  and  proliaMi'  consccincnics  is  a  vaj^no  oni';  but. 
as  Sir  Frrdrii(  k  INilldik  lias  said.*"  if  l-ai^lisli  law  seems  va;^ue  on 
these  (|uestions,  it  is  biH'ause  it  lias  j;raitj)led  more  closely  with  the  in- 
herent va<:uencss  of  facts  than  any  oilier  system. 

ilui  the  stiiui;,'  inclination  of  the  courts  to  administer  le^al  redress 
u|»on  fixed  aixl  certain  rules  has  sometimes  led  to  the  adoption  of  such 
rules  in  cases  to  which  they  could  not  be  consistently  or  justly  a}»plied. 
Hence  there  is.  ]»erliaj>s.  no  branch  of  the  law  u]»on  which  there  is  a 
jrreaier  conllict  of  judicial  decisions,  and  none  in  which  so  many  nieicly 
arbitrary  rules  have  been  atlojtted."- 

^^■here  jdaintilf  was  induced  by  false  representations  to  put  money 
in  a  siteculatiou.  and  afterwards  put  in  more  money,  the  loss  of  the 
latter  iiKiney  was  held  a  juoximate  consequence  of  the  fraud.**' 

Injury  to  jdaintilT's  mill  and  machineiy.  caused  by  a  boiler  ex]ilosi(ui. 
is  a  jiroximate  conse(]uence  of  defects  in  the  boiler."* 

Where  defendant  abducted  plaint  ill's  slaves,  leavin;^  no  one  to  care 
for  the  plantation,  it  was  held  that  compensation  coidd  be  recovered  for 
<'orn  destroyed  by  cattle  of  the  nei^dibors.  and  for  wood  swept  away 
by  a  Hood."' 

A  loss  throujih  (h'|pri\  ation  of  means  of  protection  is  pi-oxiniate.'"'*' 

oPdvcrt  V.  Cninfonl.   HI   .\.  Y.  .V_M.  :;•;  N.  K.  :>'M. 

•  ll.ivfiiy  V.  IJailniad  Co.,  135  Pa.  St.  .^)(».  !'.>  Ail.  lot."..  In  an  anion  of 
(oiitract,  Hlackhurn.  .1.,  .sai<l:  "I  do  not  tliiulc  that  the  (iiicsiioii  of  rciiiott'iicss 
ouKlit  I'viT  to  be  h'ft  to  a  .iiir.v.  Tliat  would  lu',  in  cITt'ci.  to  say  tliat  there 
sliall  he  no  such  ruh'  as  lo  ii.ima;:is  liciiiic  tt><>  reiuote."  lloliits  v.  IahhIoii 
Uailroad  Co.,  L,  H.  to  c^.  i;.  111. 

«»  Pol.  Torts,  i».  .•'..'.. 

02  Alllw)!!  V.  Chaiuller.  11   .Mich.  .".IL';    Mechein.  Cas.  l>aiii.  09. 

o"  Crater  v.   I'.iiininu'iT,  ;',:',  N.  .1.  Law,  .'>1.'{. 

««  I'aKc  V.  Ford,  11!  Iiid.   H;;    i:ii<'  t'ltv  Iron  Works  v.  HailMP.  UM',  Pa.  St.  12.". 

o-' .McAfee  v.  CrotToid.  1.'.  Ilow.    IIT. 

ooiK.rry  v.  Klitner,  UH  M.-i.-s.  i:',l:  The  Ceorire  :ind  Ui<lianl.  I..  K.  ."J  .\dni. 
A:  ]•:<•(:  4t,»i:  Wilson  v.  Newjiort  I)o<k  Co.,  L.  U.  1  Kxch.  177:  Horradalle  v. 
I'.nniton,  S  Taunt.  535,  2  .Moore,  58-.  But  sue  ilatlluy  v.  Baxeudale,  i>  Exch. 
311.  347. 


DIUKCr    AM)    CONSKQl  KNTIAl,    I,<iS>ls.  ]''i 

A  (IcfccI  in  a  fnicr  is  a  inoxiiiiatc  caiiM  <tf  a  trt'h|i:iss  liy  i  aiil<-  ami 
injury  to  cioiis."' 

It  is  nalnial  and  piohaMc  that  a  IrrspawHlnf;  Imrsc  will  ki<k  oilifi- 
horses  on  the  prrniiscs."'* 

TS'licrc  jtlaintilT's  liorscs  ('scaju'd  tliroii;^h  llic  (lff< «  i.  ami  nm-h-  kill -il 
by  the  fallinj;  of  a  haystack  on  dcfcndanrs  prcniisfs.  iln-  loss  was  lnld 
not  too  remote."" 

Where  cattle  escaped,  and  ate  biamhcs  of  a  yew  tree,  and  w.n- 
thereby  poisoned,  the  loss  is  the  proximate  result  of  the  defect.'" 

Where  defendant's  Avronj:;  oldi-^cs  jilainlitf  to  raise  money,  a  loss 
throujih  a  forced  sale  of  property  is  too  remote  to  be  comjK'nsaled.' * 

Sellinj;  animals  with  an  infectious  disease  is  the  inoximate  cause 
of  its  coninumication  to  other  animals  of  the  puichaser.'- 

Loss  of  business  caused  by  the  deprivation  of  machinery  or  of  bu- 
ness  premises  is  usually  considered  proximate.' ' 

Loss  of  j^oods  by  sudden  Hood  is  not  a  proximate  consetpieuce  of  a 
nej^dij^cnt  delay  by  a  cairiei-.'^ 

Where  a  defect  in  the  street  causes  a  traviler  to  be  thrctwn  out  of 
his  carriajie,  and  exposed  to  the  cold  and  rain,  the  city  is  liable  for  a 
serious  disease  thereby  contracted."^ 

In  all  cases,  it  is,  of  course,  prere<iuisite  to  any  liability  that  def.-nd 
ant's  act  had  an  inHuence  in  causing  the  injury."'' 

67  Scott  V.  Kenton.  SI  111.  '.Ml. 

C8  Lee  V.  Kiley.  34  Law  J.  C.  P.  212;    L.vons  v.  Morrirk.  to."  .M.is<.  71. 

60  Powell  v.  Salisbury.  2  Younjre  &  .1.  ;{!tl. 

7  0  Lawrence  v.  Jenkins,  L.  R.  S  Q.  B.  274. 

71  See  Deyo  v.  WajrKoner.  l'.>  .Johns.  (N.  Y.i  241:  Doniidl  v.  .Tones.  i:{  Ala. 
490;  Cochrane  v.  Quackenbnsh.  2ti  Minn.  :'.7i;.  13  N.  W.  l.">4:  Larins  v.  <;iirety. 
L.  R.  5  P.  C.  34r);  Travis  v.  l»ulT;iu.  2o  Tex.  4;i:  Siuiili  v.  (CDonnell.  S  Lea 
(Tenn.)  4(18. 

7  2  Wheeler  v.  Randall.  48  111.  182;    Slierrod  v.  Lanplon.  Jl    Iowa.  .".is. 

73  Waters  v.  Towers.  8  Exeh.  401;  New  York  &  C.  Min.  Syndicate  &  Co. 
V.  Fraser,  130  U.  S.  Gil,  9  Sup.  Ct.  G<;."..  But  see  Vedder  v.  llildreili.  "J  Wis. 
427,  and  Ruthven  Woolen  Mfg.  Co.  v.  Great  Western  R.  Co..  18  I'.  C.  C.  P.  .Mc,. 

74  Denny  v.  Railroad  Co..  13  C.ray  (Mass.)  481;  Morrison  v.  Davis.  2o  P.-i. 
St.  171;  Railroad  Co.  v.  Reeves.  10  ^Vall.  176.  But  see,  contra.  MichaeLs  v. 
Railroad  Co..  30  N.  Y.  5(>4;    Read  v.  Spauldinir.  Id.  «W). 

75Ehrg:ott  V.  Mayor,  etc..  W  N.  Y.  2f,4. 

76  Royston  V.  Railroad  Co.,  G7  Miss.  37G,  7  South.  320;  Ellis  v.  Cleveland,  55 
Yt.  358. 


IJ  DAMAGES. 

Tlitrc  niiist  he  .111  immcdialc  Jiiid  iwiliii'nl  rclalion  IicIwccmi  tlic  act 
oomitlaiiu'd  df  and  tin  iiijiir.v.  williniil  tlic  iiilci'vciitioii  tif  other  iiido- 
pt'iitlrnt  caiisrs.  or  llic  daiiiajits  will  lie  ton  rniHtti'.' ' 

^\'llt'I•('  a  liuniaii  a^M'iicv  oi'  the  volniitaiv  ad  of  a  |icrs(»ii  over  wIkuii 
defendant  has  no  contrid  intervenes  after  defendant's  widiii^fiil  act, 
the  <oiise(]iiences  are  us>iiallv  remote.''* 

I^iss  of  n  situation  is  not  a  i»foxiniate  conseciuencc  of  an  assault 
and  batteiy.'-' 

I'.ut.  where  the  act  of  the  third  party  is  a  natural  and  probable  re- 
sult of  defendant's  acts,  the  loss  is  not  too  nMiiote.^" 

Loss  of  credit  or  custom  involves  the  intervention  of  the  N\ill  of 
strangers,  and  is  therefore  usually  loo  remote.**^ 

I  hit.  where  the  wronjiful  conduct  directly  atl'ects  the  credit  or  tra<le 
of  plaint  ill',  the  rule  is  otlierwise.**- 

A  tresjiasser  is  liable  for  tlM>  injury  caused  by  a  crowd  which  he 
draws  after  him.  if  his  act  was  of  a  natui-e  to  attract  a  destructive 
crowi]."^ 

12.  CONSEQUENTIAL.    DAMAGES    FOR    TORTS— Com- 

pensation may  be  recovered  for  all  the  consequen- 
tial losses  resulting  from  a  tort  w^hich  -were  natu- 
ral and  probable  at  the  time  the  tort  was  commit- 
ted. 

13.  CONSEQUENTIAL     DAMAGES     FOR    BREACH    OF 

CONTRACT — Compensation  may  be  recovered  only 
for    such    consequential    losses     resulting     from    a 

TT  Kuekcr  V.  MamifMclmiiiK  Co.,  .'4  Gn.  S4. 

T*- Hurloii  V.  I'liikcrtdii,  L.  1{.  2  Kxch.  :'.I0;  Stone  v.  Codmaii.  !."»  I'ick. 
(MasK.)  2\i~:    Schmidt  v.  Mlfctirll.  s^  I   III.   I'.i.-.. 

T»  Brown  v.  C'uiiiriilnj;^.  "i   Ali'ii  i.M.iss.i  ."ioT. 

»»  GrlKKS  V.  Klcckeustciii,   It   Miim.  M    Hlil.  tIJi. 

">  Ixjwcnstchi  V.  Monroe,  ."i  Iowa,  M'J,  7  .\.  ^^'.  ^OO;  Wcoks  v.  Prcscolt.  .'•S 
Vt.  .''(7.  S»'c  Alexander  v.  Jacoliy,  2'.^  (Hiio  St.  .Ti8.  Contra,  MacVeaj^h  v. 
I'.:illey,   L'«»   III.    .\],]k   C,(h;. 

" a  Swain  V.  SiliKfTrlii),  l.'it  N.  Y.  471.  .".1  .\.  K.  lo_'.'.;  r.nyd  v.  I'itl.  14 
Ir.  C.  L.  4.'.. 

«3  Fairbanks  v.  Kerr,  7U  I'u.  St.  iHi;    Guille  v.  Swan,   VJ  .Johns.  uN.  V.)  3S1. 


DIUKCT    AM)    (ONSKiirKNTIAl.    I.OSSK.S.  1  •'> 

breach  of  contract  as  were  natural  and  probable 
under  the  circumstances  contemplated  by  the  par- 
ties at  the  time  the  contract  -was  made. 

Til  determinin};  wliat  coiis^njuciilijil  Iossch  sliall  Im*  comiMMisiitKl.  llifn- 
is  ail  important  <listint'ti<)ii  iK'twtMii  cnscs  of  cDiiti-u-f  ami  (■■mh'H  of 
toil."^ 

Lialiilily  for  consccnienccs  is  imirli  inorr  ••\itii(l"<l  in  ili<'  fasi'  of 
torts  than  of  contracts.  CoinjM'iisalion  may  In*  rrcitvcrcd  for  all  ili'- 
injurious  consequences  of  a  tort  which  rtsult  accdnliii^'  to  llic  usual 
order  of  events  and  general  experience,  and  whiih.  ilH-nfurc.  at  Ihc 
time  the  tort  was  committed,  the  wronjidocr  may  rcMsmmltly  Im-  pre- 
sumed to  liave  anticipated/^' 

But,  for  breach  of  contract.  C(im|iciis;iti«»n  may  he  recovered  <inly 
for  such  consequential  losses  as  are  natuial  and  jnohaMe  undei'  the 
circumstances  contemphited  by  the  parlies  at  the  time  the  <<.nlract 
was  made:  and  it  is  wholly  immaterial  wliat  consefpiences  are  naiural 
and  probable,  or  even  actually  contemplated  at  the  time  of  the 
breach.^* 

Consequential  Damages  for  Torts. 

Where,  at  the  time  a  tort  was  committed,  it  mijiht  have  been  re:i- 
sonably  expected  to  set  in  operation  the  intermediate  cause  of  an  in 
jury,  or  where  it  exposes  plaintilT  to  tlie  risk  of  injury  from  some 
fairly  obvious  danj;er,  which  ultimately  results  in  injury,  the  loss  is  a 
natural  and  probable  one,  and  may  be  conqM  usiiied." 

84  Sutb.  Dam.  §  45. 

ssHoadloy  v.  Transportation  Co..  ll.".  Mass.  .'?04:  Flnri  v.  City  of  St.  Louis. 
69  Mo.  341;    Hughes  v.  McDonougb,  43  N.  J.  Law.  4.'.!>. 

86Suth.  Dam.  §  45;  Anson,  Cont.  310;  Hadley  v.  Baxeiidalp.  9  Exch.  341; 
Candee  v.  Telegraph  Co.,  34  Wis.  479;  Paeiflc  Exp.  Co.  v.  Darnell.  O'J  Tex. 
6.39;  Thomas,  H.  &  W.  Mfg.  Co.  v.  Wabash.  St.  L.  &  P.  Ry.  Co..  02  Wis.  (M2. 
22  N.  W.  827;  Smith  v.  Osboru.  143  >Lass.  185.  9  N.  E.  T^TvS:  Packard  v.  Slack. 
32  Vt.  9;  Smith  v.  Green,  1  C.  P.  Div.  92;  Hiech  v.  Belch.  (W  Iowa,  52«i.  27 
N.  W.  507;   Jones  v.  Gilmore,  91  Pa.  St.  310. 

ST  Sutb.  Dam.  §  28;  Bowas  v.  Tow  Line,  2  Sawy.  21,  Fed.  Cas.  No.  1.713; 
Whart.  Xeg.  §§  77.  78:  Higgins  v.  Dewey,  107  >Lnss.  4M:  Stevens  v.  Dudley. 
56  Vt.  108;  Evans  v.  Railroad  Co..  11  Mo.  .Vpp.  403;  Ehrg..tt  v.  Mayor,  etc.. 
96  N.  Y.  281;  Baltimore  City  Pass.  Ry.  Co.  v.  Kemp.  01  Md.  74.  See  Brown 
V.  Railroad  Co.,  54  Wis.  342,  11  N.  W.  350.  911. 


10  DAMAiiKS. 

CimAfiqxiential  Damacfefi  for  lirnirJi  nf  ( 'nnfrarf. 

I^ir  iiiiyiliin^^  aiiKnintiii^  to  a  (iirccl  bicadi  of  coulract,  wliother 
foi('S('(  n  or  iinforcscf'ii.  the  paity  rosjioiisihk'  tlieri'for  is  liabk'.  hecaiisf 
lu'  lias  coiitractod  that  the  other  party  sliall  receive  that  very  thiiij;; 
Init  lie  is  not  liable  for  iiKiireet  or  consequential  losses  resiiltin<j;  from 
the  Itrtacli.  unless  they  are  such  as  the  ])arties  may  reasonably  be 
iufsuincd  lo  have  contemplated  at  the  time  the  contract  ■was  made.** 

In  Iladley  v.  P.axendale*  an  attempt  was  made  to  settle  this  branch 
of  I  he  law.  and  a  rnlc  was  laid  down  to  govern  the  award  of  damages 
for  breach  of  contract,  that  has  been  jijenerally  accepted  both  in  Eng- 
land and  America.  The  court  said:  "Where  two  i)arties  have  made 
a  contract  which  one  of  them  has  broken,  the  damages  which  the  other 
party  ought  to  receive  in  respect  to  such  breach  of  contract  should 
lie  such  as  may  fairly  and  reasonably  be  considere'd  either  arising 
naturally — i.  e.  according  to  tln^  usual  course  of  things — from  such 
lin-ach  (»f  contract  itself,  or  such  as  may  reasonably  be  supposed  to 
liave  been  in  the  contemplation  of  both  parties  at  the  time  the}'  made 
I  he  contract,  as  the  probable  result  of  the  bn^ach  of  it." 

Three  rules  may  be  deduced  from  Hadlcy  v.  IJaxendale:  First,  that 
damages  which  may  fairly  and  reasonably  be  considered  as  naturally 
arising  from  a  breach  of  contract,  according  to  the  usual  course  of 
things,  are  always  reco\lMablc;  ''"  secondly,  that  damages  which  would 
not  arise  in  tln^  usual  course  of  things  from  a  bi-each  of  contract,  but 
which  do  arise  fictin  circinnstanccs  jM-culiar  to  the  special  case,  are 
not  recoveiabie.  unless  the  sj)ecial  circumstances  are  known  to  the 
Ix.*rson  who  has  broken  the  contract;  ""    thirdly,  that  where  the  special 

88  Allison  v.  CliaiKll.r.  11  Mich.  :A2\  .Mccli.  Cas.  Dnin.  99;  Rochester 
Lantern  Co.  v.  Stiles  iV-  I'.irUcr  Tress  Co.,  i:;.".  .\.  Y.  217.  ::i  N.  E.  1018. 

•9  K.xch.  :J41.  L';5  Law  .1.  L.xch.  179.  IS  .]ur.  WT^S.  -JC  Lnj:.  Law  &  Eq.  398. 

8»  SedK.  Mcas.  Dam.  S  14.S:  Pcnlv  v.  Frost.  1C,2  M:iss.  li9S.  ;}S  N.  E.  TjIS.  See. 
also.  Little  v.  Uailntad  Co..  cr,  .M.-.  L';59;  ("oljanl  v.  ICailroad  Co.,  7  Hurl.  &  N. 
79;  (ice  v.  Kailro.-id  Co.,  <;  Hurl.  iV-  X.  I'll;  Wiis.n  v.  Railroad  Co.,  9  C.  B. 
(N.  S.)  i\:vi;  Wilson  v.  Dock  Co..  L.  R.  1  Exdi.  177;  Baldwin  v.  Telegraph  Co.. 
4.".  N.  V.  744.  7.^)0;  Ward  v.  Railroad  C...  47  \.  Y.  29,  .'{2;  Sliepard  v.  (Jasliplit 
Co.,  ir>  Wis.  :!1,S;  Booth  v.  .Mill  Co.,  Co  \.  Y.  487;  Cory  v.  Iron-Works  Co., 
L.  R.  ::  <2.  B.  188. 

""(ice  V.  Railroad  Co.,  0  Ihnl.  A:  .\.  211;  Howard  v.  Manufacturing  Co., 
130  U.  S.  1!«>,  11  Slip.  Ct.  500;  Ca.se  v.  Stevens,  137  Ma.ss.  551;  Mather  v. 
Express  Co.,  138  Ma.s.s.  .".5;  Fox  v.  Railroad  Co.,  148  Mass.  220,  19  N.  E.  222: 
}{.-n7,iger  v.  Miller,  50  Ala.  20<J;    Keith's  Ex'r  v.  Hiukstou,  9  Bush  (Ky.)  2.s;{; 


■JlIK     UKQIIIKKI)    (KKTAINTY.  17 

circunislniiccs  iiic  known  or  liwvc  been   (•(iiiiiiiiiiilcntrd   id   (he  [»•  r>ni» 
wlio  lircaks  llic  conlriict.  jiiid  wIktc  Ilic  (l;iiii;i;:('  cuiiiiilaiiifil  ul    IIuwh 
uatmally  fioiii  the  biiadi  of  contiact  iUHlcr  lliost*  H|)('cial  ciiriinislari 
ces,  then  such  special  damage  must  be  supposed  to  have  been  conleui 
phited  by  the  parties  to  the  contract,  and  is  recoverable."^ 

A  further  rule  is  implied,  viz.  that  damage  which  cannot  be  consid- 
ered as  fairly  and  naturally  arising  from  breach  of  contract  under  any 
given  circumstances  is  not  recoverable,  whether  those  circumslances 
were  or  were  not  known  to  the  person  who  is  being  charged."^ 

THE    REQUIRED   CERTAINTY    OF    DAMAGES. 

14.  Losses  must  be  certain  in  amount,  and  certain  in  re- 
spect to  the  cause  from  -which  they  proceed,  or 
damages  therefor  cannot  be  recovered.  The  bur- 
den of  proving  both  these  facts  is  on  the  plaintiff. 

In  an  action  for  damages,  the  plaintiff  must  juove.  as  a  jiai  t  of  his 
case,  both  the  amount  and  the  cause  of  his  loss.  Absolute  ((rtaiiity 
is  not  recpiired,  but  both  the  cause  and  the  probable  amount  (jf  ihi-  loss 
must  be  shown  with  reasonable  certainty."^ 

Reasonable  certainty  means  reasonable  probability.®* 

Thomas.  B.  &  W.  Mfg.  Co.  v.  Wabasb,  St.  L.  cS:  V.  U\.  Co..  c,l>  Wis.  <W2.  _'-• 
N.  W.  827. 

«i  Borries  v.  Hutchinson,  IS  C.  B.  (N.  S.)  403;  Messuiore  v.  Lt'.nd  Co.,  4U 
X.  Y.  422;  Illinois  Cent.  R.  Co.  v.  Cobb.  04  111.  128:  Hammond  v.  Bussi-y.  20 
Q.  B.  Div.  79;    Smith  v.  Flanders.  129  Mass.  322. 

»^  Mayne.  Dam.  10:  Hamilton  v.  Kailroad  Co..  ix;  N.  C.  .'UtS.  .3  .><.  K.  HM; 
Deming  v.  Kailroad  Co.,  48  N.  H.  4.55;  liocht'Ster  Lantern  Co.  v.  StiK's  iV  I'arkcr 
Press  Co..  135  X.  Y.  217,  31  N.  E.  1018.     See  Hexter  v.  Knox.  (13  X.  Y.  7n\\. 

0  3  East  Tennessee,  V.  &  G.  R.  Co.  v.  Staub,  7  Lea  (Tenn.)  397:  Wohott  v. 
Mount.  ;?(>  X.  .T.  Law,  262,  271;  Allison  v.  Chandler,  11  Mich.  542.  ."..V.; 
Satchwell  v.  ^yilliams,  40  Conn.  371;  Suth.  Dam.  S  53:  Rochester  Lantern 
Co.  V.  Stiles  &  Parker  Press  Co.,  1.35  X.  Y.  217.  31  X.  E.  1018;  Griffin  v.  Col- 
ver,  16  X.  Y.  494;  Leeds  v.  Gaslight  Co..  90  X.  Y.  2t;:  Dnko  v.  Railway  Co., 
09  Mo.  347.  351,  12  S.  W.  636. 

04  Griswold  V.  Railroad  Co.,  115  X.  Y.  61.  21  X.  E.  72«J:    United  States  Trust 
Co.  V.  O'Brien,  143  X.  Y.  284,  38  X.  E.  266. 
CHAP.DAM.— 2 


18  dama(;ks. 


SAME— PROFITS  OR  GAINS  PREVENTED. 

15.  Compensation  may  be  recovered  for  profits  lost  -when 
the  loss  is  a  proximate  and  certain  result  of  the  tort 
or  breach  of  contract. 

''Tho  broad  {^'ciu'ral  iiilc  in  siicli  cases  is  llial  Ihc  i>aity  iiijurcil 
is  entitled  to  recover  all  his  damages,  including  jiains  prevented  as  well 
as  losses  sustained;  and  this  rule  is  subject  to  but  two  conditions: 
The  damajjes  must  be  such  as  may  fairly  be  supposed  to  have  entered 
into  the  contemplation  of  the  parties  when  the}'  made  the  contract. — 
that  is.  must  be  such  as  might  naturally  be  expected  to  follow  its  viola- 
tion; and  they  must  be  certain,  both  in  their  nature  and  in  respect  to 
the  cause  from  which  they  proceed."®^ 

Where  the  losses  claimed  are  contin<>ent,  speculative,  oi'  mei'ely 
possible,  they  cannot  be  compensated."" 

Anticipated  ])rofits  from  a  competition  or  speculation  are  too  uncer- 
tain to  be  compensated.®" 

Where  j)laintift"  is  engajied  in  a  mercantile  business,  conijtensation 
for  a  personal  injury  is  limited  to  the  value  of  his  loss  of  time.  Loss 
of  ]>rofits  of  the  business  through  the  injury  to  the  good  will  is  not  a 
natural  conseciuence."^ 

85  WitluM-hci'  V.  .McviM-.  ir»r.  N.  Y.  4  4<;.  .")(>  N.  E.  HS;  (Jiitliii  v.  Colvcr,  Ki  N.  V. 
480.  401;  Booth  v.  Mill  Co..  (JO  N.  Y^4S7;  Wakcinan  v.  Maiuiractnrinj;  Co.. 
101  N.  Y.  '20'}.  4  N.  K.  204;  licriistcin  v.  Mfcch.  VM)  N.  Y.  3:>4,  2U  N.  E.  255; 
Thomson-IIoustou  Eh'ctric  Co.  v.  luiiaiit  Land  Imit.  Co.,  144  N.  Y.  47,  39  N.  E. 
7;  Uanfortli  v.  Itallroad  Co.,  sn>  Ala.  IVM,  Ui  South.  .">(5;  Peunypacker  v.  .Tones. 
1(J<J  I'a.  St.  'Zn.  Cf.  Anson,  (.'out.  (Am.  Ed.)  .'Ul,  note;  Howard  v.  Manufa< - 
turin^r  Co.,  V.'A)  T'.  S.  I'.tO.  11  Snp.  Ct.  .".oo. 

»«  Wllherbfc  v.  Meyer,  155  N.  Y.  44<i,  4.5:5.  50  N.  E.  .5,S;  Do  Costa  v.  .Miiiiiiir 
Co..  17  Cal.  G13;  Todd  v.  Keeue,  1(57  Ma.ss.  157,  45  N.  E.  81;  Moss  v.  Tomi.Uiiis. 
(J!»  Hull.  2.S8,  2:5  N.  Y.  Siii»|).  (PJ.'i;  Id..  Ill  X.  Y.  (',:,<).  .'?!)  \.  E.  8.5,S;  Bernstein 
V.  MiH'ch,  i:'.0  .\.  Y.  :'.5t.  2;t  X.  i;.  jn.-.;  I'-iy  v.  Uailway  <"o..  45  Iowa,  41»i; 
Lincoln  V.  It.-iilroad  ('«i..  2;;  \\Ciid.  i.N.  Y.»  12.'.;  St.i.il  v.  Kailru.id  Co.,  KiT 
X.  Y.  <;25,  l.'j  X.  E.  021;    ( •liicaj^o  Cily  Uy.  ('<..  v.  llmiy.  f.j  Hi.   i  |l'. 

»■  \Vatson  V.  Railroad  Co..  15  Jur.  448;  W.  f.  'I'd.  < '...  v.  (rail.  :!!»  Kan. 
.580.  18  Pac.  71!>;  Mi/.iicr  v.  Frazier.  40  Mich.  .-,<I2;  \V.  V.  Tel.  Co.  v.  Hall.  124 
V.  S.  444.  S  Sup.  Cl.  577.      r.iit  si'f  .\d;inis  K\\).  Co.  v.  Ejrhert,  'M'>  I'a.  St.  :'>(»n. 

»»  Marks  v.  Kailro.i.l   Cu.,   It   D.ily   (\.   Y.)  01;    I'.icili.irii   v.   Kiil»i)er  Co.,  54 


TIIK    KKCillUKI)    CKIITAINTY.  1'.' 

The  iisiiii]  and  oi'diiiarv  jnotits  of  an  cslaldislnMl  hiisiiicHS  or  j)ic)f. 
•sioii  arc  nasonalilv  cci'laiii.  and  iiiav  he  recovered  in  an  action  f«>r  in 
teri'ui)ti<)n  of  the  business,  in   tin-  ahsciMc  of  anything  sliowin;:  lliat 
they  would  not  liavc  been  ivali/.cd. '' 

Some  businesses  are  of  so  uncertain  a  naiurc  that  thtir  pKitiis  never 
become  established,  such  as  fisliiii};.""* 

I'laintitT  cannot  recover  anticipated  jtrolits  of  a  new  bnsiiicHH,  in 
which  he  was  wronjifull.v  incvented  from  enlbal•kin;^^"" 

Damages  for  the  loss  of  use  of  hind  or  business  jireinises  arc  liic 
rental  value,  and  the  same  measure  is  to  be  ap|)n<'il  in  art  ions  ban-il 
on  breach  of  contract  to  deliver  niaehiner\.  or  furnish  water  power  for 
mills,  etc.,  where  no  special  circumstances  exist  rendering  loss  of  ex 
pected  profits  a  more  appropriate  measure.' "- 

Compensation  may  be  recovered  for  loss  of  earnings  or  income  caused 
by  personal  injuries.* 

Loss  of  profits  by  the  destruction  of  an  unnuitured  crop  is  usuall.v 
regarded  as  too  uncertain  to  be  compensated; '''■''  but  compeu.sation 
based  on  the  average  croj)  of  that  year  has  been  allowed.*"* 

Wis.  208,  11  N.  W.  514;    Masterton  v.  Villajjp  of  Mt.   Vernon,  ."is   N.  Y.  :'.'•' 
But  see  Ehrgott  v.  Mayor,  etc.,  96  N.  Y.  27."». 

09  Dickinson  v.  Hart.  142  X.  Y.  ISi.  IW  N.  E.  801:  Snow  v.  rulltzer,  142 
N.  Y.  2(J3.  3(i  N.  E.  lo.j!>;  AllLsou  v.  Chandler.  11  Mich.  542:  Peltz  v.  Ei<li«'le. 
62  Mo.  171:  IChrgott  v.  Mayor,  etc.,  96  N.  Y.  275:  Erench  v.  L\ini!>er  Co..  H-". 
Mass.  261.  14  N.  E.  113. 

100  Wright  V.  Mulvaney,  78  Wis.  Sit.  46  N.  W.  ln4.".. 

101  Red  V.  City  Council,  25  Ga.  38<»:  Greeuo  v.  Williams.  15  III.  2tM;:  Mon-y 
V.  Gaslight  Co.,  .'»  N.  Y.  Super.  Ct.  185. 

102  Witherhee  v.  Meyer.  155  N.  Y.  44<;,  50  N.  E.  5S:  Grlltln  v.  CtUver,  M 
N.  Y.  489;  City  of  Chicago  v.  Hueuerl)ein,  85  111.  5'.M:  Ile.xter  v.  Knox.  03  N.  Y. 
561;  Townsend  v.  Wharf  Co.,  117  Mass.  .501:  Dodds  v.  Hakes.  114  N.  Y.  '^¥K 
21  N.  E.  396.     But  see  Cargill  v.  Thomp.sou.  57  Minu.  54S.  5;t  N.  W.  6.38. 

*  Moore's  Adui'r  v.  Minerva.  17  Tex.  20;  Wade  v.  Leroy.  2o  How.  34;  Plerci; 
V.  Millay,  44  111.  189;  Masterton  v.  Village  of  Mt.  Veruon.  58  N.  Y.  391;  Shee- 
han  V.  Edgar,  58  N.  Y.  631;  Pennsylvania  &  U.  Canal  Co.  v.  (;rnliam.  aT 
Pa.  St.  290;   Houston  &  T.  C.  Ry.  Co.  v.  Boehni.  57  Te.x.  152. 

103  Gresham  v.  Taylor,  51  Ala.  505;  Richardson  v.  Northnip.  <^;  I'.arh.  iN.  Y.i 
So;  Texas  &  St.  L.  R.  Co.  v.  Young.  60  Tex.  2ttl. 

104  Payne  v.  Steamship  Co..  :«  La.  Ann.  164:  lJi<  .•  v.  Whitniore.  74  Cal.  611». 
16  Pac.  501.  See.  also.  Wokotl  v.  Mount,  3<;  N.  J.  l.aw,  262;  Passiuger  v. 
Thorhurn,  34  N.  Y.  634. 


20  I)AMa<;ks. 

I\»r  liirjicli  nf  a  cuiifrnrt  of  ]i:irliicrslii]i.  jdaiiililT  ina.v  r<'cov(>r  siirli 
jMoliis  as  lie  rail  |iio\c  with  irasoiialilr  ici  laiiily.  I-lx  idriitt-  <»f  past 
|ii(tlils  is  adinissililt'.  but  ii<it  rdiiclnsivc.'"' 

Wlu-n  the  pailiicrsliiji  was  UTMiiiiahk'  on  iioliir,  fnliiir  innliis  can 
iKit  1m'  nMovcrt'd.'"" 

I'K.liis  <if  lullali  lal  Iransacliniis  arc  usually  !<»<•  ifiuiitc  and  iinccrtaiii 
to  he  rtMovcicd  f(U-  hicarli  of  coiilnict ; '"^  but.  wiirrr  the  piutlt  is 
I  lit'  tiling  contiaclcd  for.  it  may  bi'  recovered.'"" 

The  aveia.i:e  or  usual  \alui  of  iIk'  nsr  df  ]Misi»ual  inniieiiy  is  the 
niiasuir  of  daiua;;es  for  the  loss  of  its  use.'"'' 

I'oi-  the  loss  of  personal  pioperty.  the  wliolesile  market  value,  and 
not  the  retail  value,  is  tin-  measure  of  damaues."" 

The  labor  of  ]irofessional  men  lias  no  tixfd  market  value.  \\\\a[ 
the  injm-ed  j»erson  has  earned  in  the  j»ast  is  evidence,  thouuii  not  con- 
clusive, of  what  he  niij;ht  have  earned.'" 

It  is  immaterial  that  plaintitT  is  not  le.uaiiy  entitled  to  such  earnin};s, 
if  he  was  in  the  customary  receijit  of  tliciii."- 

r.ut  loss  of  earniti^'s  in  an  illej^al  employment  cannot  be  comiH,'n- 
sjited."* 

105  Hat'Icy  V.  Siuitli.  10  N.  Y.  4S!»:  Gnlo  v.  L.-ckio.  2  Starkie.  loT;  Dart  v. 
I.aiiiilM'iT.  loT  N.  V.  i\rA,  14  N.  K.  -".►l;  I»riiiiis  v.  .Maxtichl,  to  Allen  (Ma.s.s.> 
i:ts. 

JO'i  SkiiiiuT  V.  Tinker,  :;  1  IJarh.  (N.  \ .)  :!."..'.;    I'.all  v.  I'.iiltDii.  r»s  'Vv\.  .'.7. 

1"'  I'ox  V.  llanliii;:.  7  ("nsli.  (Mass.i  .">1C.:  Mace  v.  Itainscy.  74  N.  C.  11; 
Mitrlicll  V.  ("iMiii'll,  44  .\.  V.  SuiKT.  Ct.  4ol:    .Shaw  v.  IIolTniaii.  11.".  Midi.   ICJ. 

1""  .MasttTtou  V.  Mayor,  etc.,  7  Hill  (N.  Y.)  Ul ;  Lentz  v.  Choteau,  412  I'a.  .Si. 
4::.'.. 

""'IJciitiiii  V.  Fay.  (•,!  111.  117:  Slirlhyvillr  1,.  H.  K.  (..  v.  I.cwark.  4  liid.  471; 
.N.luiHoii  V.  Inliahitants  of  Ifolynkc.  lo.".  .Mass.  so;  I.iue  v.  n(>isiiii,'tnti.  .".U  Vt. 
y.Ui;   \Vhltsnn  v.  (Jray,  .'{  Heat!  ('ri'iui.i  441. 

>'"Yiimijr  V.  Cun-toii.  HI  Ala.  7l.'7.  «>  South.  :'..'>!:;  AVchlc  v.  Ilavilaiid.  f,U 
N.  Y.  44M.      Hut  sf«'  Alaliauin  Iron  \Voiks  v.  Hurley.  S<;  Ala.  i:i7.  r»  .South.  41.S. 

m  reruisylvanl.i  H.  Co.  v.  Kale.  7<>  Ta.  St.  47;  New  .Jersey  Hxp.  Co.  V. 
.NUhfdK.  Xi  N.  J.  Law,  4:'.t;  Nash  V.  Sharpe.  1!»  Hun  (N.  Y.)  .'{(JT);  ^Valkl•^  V. 
l::iilway  Co.,  tU  liarli.  (N.  Y.)  l-'tat;  Itaker  v.  Hallway  Co..  .".4  N.  Y.  Super.  Ct. 
',','M:  rhlillpH  V.  Hallrond  Co..  T.  C.  I'.  I>lv.  IXO;  Melcalf  v.  Haker.  ."7  N.  Y.  <Wi2; 
CbUiDS  V.  Do'Ik*'.  '{7  .Minn.  .".o:!.  :'..->  .\.  \V.  .".<X,  .M.isteitc.n  v.  Vill.i^'e  of  Mt. 
Vern«.n.  W  N.  Y.  301. 

ii;-  nUllli.s  V.  Hallrond  Co.,  .''>  C.  V.  I>iv.  ILHO;    Holmes  v.   Hal.le.  74   .Me.  liS. 

ii>  .lafij'i''**  ^'-  Itallruad  Co.,  41  Conn.  i'A;  KaiilTniau  v.  Halxock,  G7  Tex. 
-•41,  2  S.   ^V.  878. 


KI.KMKN'rs    OK    ( oMl'KN.HAllii.S.  21 

A\'lM'it'  oiM'  is  iiol  cii^;!;,'!'*!  in  Itiisimss  ;it  tin-  liiiif  <tf  :iii  iiijiirv.  Im* 
may  recover  compcnsai  inn  foi  licin^'  piixniitd  from  cnj^a^iinn  in  Jnit*! 
noss  in  llic  fntni<'.' ' ' 

A  dealci'.  Iiaxiiiii  a  roiitiact  rij^Iit   In  fxrliisivr  rounty  wileH  of  an 
ollici's  undds.  may.  if  tin-  laiirr  Ih.mUs  tin-  roniract  and  inaln-H  Hjilef 
by  ollicrs.  i-ccovei'  tlic  prolils  lie  wniiltl  iia\f  rcali/i'd  on  thow  K.al«'»<."' 

WIh'Ic  a  conslniclion  contract  calls  f(M'  jtaymt-nts  in  installnifntK. 
the  conliarior  may.  Mpon  failniv  to  pay  a  ^^ivfn  installmtiit.  n-w-ind 
and  recover  for  materials  and  services  already  siii»pli<-d  or  nndcnil. 
or  may  proceed  with  the  work  and  sue  for  the  installment  due;  but  In 
cannot  nfiise  to  proceed,  and  then  recover  prospective  profits.  To 
entitle  him  to  such  profits,  it  must  api-ciir  that  ho  is  willing  to  proci-tMj. 
and  that  the  defendant  has  repudiated  or  abandiuied  the  contra«  i."* 
Pi-dxpKiii'c  Gii'ni^  fiurm  Propertii  J'ntnlh/  Disfroij,)/. 

Anticii)ated  i>rofits  or  {jjains  from  the  us*'  of  properly  which  has  been 
totally  destroyed  by  defendant's  widn-  do  noi  fall  within  the  rub-,  and 
cannot  be  recovered.  In  such  cases  compensation  is  ;;ivon  for  tli< 
whole  value  of  the  property  destroyed,  and  thereupon,  in  le;;al  con 
templation,  all  plaintitT's  title  and  interest  in  the  pr.iperty  ceases."' 

ELEMENTS    OF    COMPENSATION. 

16.  Damage   in   respect   to    anything  in  the    enjoyment  of 

which  one  is  protected  by  law  may  be  a  subject  for 
compensation. 

17.  Damage  for  which  the  law  affords  compensation  may 

be  divided  into  three  classes: 

(a)  Pecuniary  losses,  direct  and  indirect; 

(b)  Physical  pain  and  inconvenience; 

(c)  Mental  suffering. 

The  law  awai'ds  damages  only  for  injuries  fo  person,  property,  or 
reputation.  An  injuiy  in  any  one  of  tlusc  respects  may  alb  ct  «»ne  in 
one  or  more  of  three  ways.     It  may  cause  tl)  pecuniary  loss,  direct  or 

114  Fishor  v.  .Tanscii,  128  111.  54;>.  2\  N.  K.  598. 
116  Dr.  Ilarter  Medicine  Co.  v.  Hopkins.  Si  Wis.  .312.  5.3  N.  W.  .V»l. 
116  Wharton  &  Co.  v.  Winch.  14o  N.  Y.  2sT.  :i.*.  N.  E.  581». 
iiv  Sedg.  Moas.  l>ain.  §  ITS.    McKuighl  v.  llatcliff.  44  Ta.  St.  l.-Ki;    Edwards 
V.  Hoebe,  4S  Barb.  ^N.   V.)   100. 


•_"J  UAMACiKS. 

iiidiriMt;  iJi  pliysical  jmiii  ;iii(l  inconvenience;  and  {'.\\  mental  snlTerin;;. 
All  liner  are  projier  eK'nients  of  conipensiitiou  to  be  considered  iu  es- 
timating' damajj:es. 

SAME   -PECUNIARY   LOSSES. 

18.  Compensation  for   all  pecuniary  losses  which    are  the 

proximate  and  certain  result  of  the  cause  of  action 
may  be  recovered,  except — 
EXCEPTION — Counsel  fees  incurred  in  litigation  caused 
by  the  "wrong  are  usually  not  recoverable. 

Oenerally  sJ)eakin^^  jiocnniai y  losses  are  always  an  element  in  esti- 
mating the  damages  cansed  by  a  wrong. 

h.rpenxi'tt  of  Litigation. 

The  expenses  of  litigation  to  obtain  comjtensation  for  a  wrong, 
though  the  natural  and  ])robable  conseiiuence  of  an  injury,  cannot 
usually  be  i-e((»\-ered  as  damages.'"* 

In  general,  tlie  law  considers  the  taxed  costs  as  the  only  damage 
which  a  paity  sustains  by  the  <lefense  of  a  suit  against  him.  and  these 
he  rec<»veis  by  the  judgment  in  his  favor. ^'^ 

SAME— PHYSICAL  PAIN    AND  INCONVENIENCE. 

19.  Compensation  may  always  be  recovered   for  physical 

pain  which  is  the  proximate    and    certain    result  of 
a  w^rong. 

20.  Inconvenience  amounting  to  physical  discomfort  may 

be  compensated. 

Physical  pain  or  iiicon\enience  which  is  the  proximate  ainl  certain 
n  suit  <»f  a  wrong  is  always  an  element  of  compensati<ui.'-" 

"-  CONTIIACTS  (Joodliiir  v.  Liiid.sk'y,  51  Arli.  :tso.  \\  s.  \V.  TiTT;  Vorsc  v. 
riiilUpH.  .17  Iowa,  428;   Offult  v.  i;.lwanls,  \)  Hi.li.  (I.:i.i  '.mi. 

TOUTS  riniKlciK  V.  Twccil.  1.'.  Wall.  4r.O;  Winslcad  v.  IIuliiic.  :VJ  Kan.  r)(W, 
J  I'ac.  <KM;  Kelly  v.  Uo«crH,  'Jl  Miiui.  14<i:  III<  ks  v.  Fcistcr,  1:5  Harb.  (N.  Y.) 
«>«:    HlHhop  V.  Il.'iulrick.  HU  Hun.  '.VS.',.  '.\\  N.  Y.  Supi..  .".oj. 

no  Young  V.  Courtney.  V.\  Ln.  Ann.  l'J3. 

laopit-rce  v.  Millay.  W  ill.  1S1»;  McKlnlcy  v.  Hailruad  (Vi.,  44  Iowa.  '.\\\; 
Ross  V.  Leyt'ctt,  01   .Midi.  413,  1:8  N.  ^V.  <\'Xi\    Stcplic'U.s  v.  Kailroatl  Co.,  '.JO  .Mo. 


KI-KMKNTH    (iK    Ci  )M  IKNSATIi  )N. 

Tlic  MUHMiiil  (if  (l;iiii;i.i:<s  awnnlcd  is  iicc.-ssnril.v  l.ft  t<t  tlw  Koiirul  t]\< 
crctioii  of  tlic  jury,  lor  llicre  is  no  arillmiflital  iiilf  \>\  wliirh  tli«-  ••<|iii\ 
alcnt  of  such  iujuiii-s  in  money  can  Ix-  csliniafc(l.     I)ain:i;^»-s  cannot 
he  rt'covcn-d  for  inconveni('n<('  or  annoyance,'"  nnlcKH  it  aniouniH  to 
physical  <lis((»iiir<irl.'-'- 

"The  injury  ninsl  be  piiysical.  as  distinjiuished  iiotn  -.nc  pureiv 
iniaj^inative.  It  must  lie  soMiriliin;^  thai  |»ro<luc«'s  real  diHomfort  or 
annoyance,  through  the  ninliiMu  (»t  ilie  senses,  iK)t  from  delicacy  of 
taste  or  relined  fancy."  ^'^ 

SAME— MENTAL   SUFFERING. 

21.  Mental  suffering   standing    alone   will  not  support  an 

action  where  damages  is  the  gist  of  the  wrong 

22.  Mental  suffering  which  is  the   proximate   and   certain 

result  of  conduct  actionable  per  se,  whether  a  tort 
or  breach  of  contract,  may  be  compensated. 
EXCEPTION  — In  many  states   compensation   cannot  be 
recovered    for    mental    suffering    resulting    from    a 
breach  of  contract. 

Mental  Siffri'hig  as  th,'  B<ix>x  of  a  Came  of  Arfion. 

It  has  been  doubt <m1  whether  comi)ensation  can  ever  bo  rorovered  for 
mental  sutleriu^-,  as  distin<ruished  from  jihysical  suffering.*-* 

It  is  true  that  where  the  ne-lii:enl  <.i-  wronj^ful  act  of  on.-  [K-min 
puts  another  in  a  position  of  peril,  and  ihenby  causes  bar  and  app: 

207,  9  S.  W.  aSO:    T'ciuisylvania  \-   <  >.  <:im.i1   ("o.  v.   Crahaiii.  li-'i  I'a.   St.  aw; 
Goodno  V.  City  of  Oshkosli.  U8  Wis.  Mo'i. 

121  Hamlin  v.  Railway  Co.,  1  Hurl.  \-  .V.  4..s:  Hunt  v.  ].  nival.  Diul.  <S.  C) 
180;  Counell  v.  Telepraph  Co..  llC  Mo.  34.  iT.'  S.  W.  MTk  Unf^seW  v.  Tel.'crflph 
Co.,  3  Dak.  31o,  19  N.  W.  408;    Wilcox  v.  Kailr.-a.)  C...  3  C.  C.  A.  73.  .VJ  Ked. 

264.  _ 

122  Chicago  &  A.  R.  Co.  V.  Flacp.  43  111.  3.^;  Kuu-vy  v.  .ny  ..f  i>.«,-ll.  UO 
Mass.  197:  Ross  v.  Lojrgett,  61  Mich.  44."..  28  N.  W.  .KC  But  spc  Walsh  v. 
Railway  Co..  42  Wis.  23. 

123  Wostcott  V.  Middleton.  43  N.  J.  Eq.  478.  4n;.  U  All.  4l«»:  M..  44  .N.  .1.  Eq. 
297.  IS  Atl.  80.      And  see  Baltimore  &  O.  R..Co.  v.  Carr.  71  Md.  135.  17  Atl. 

1052.  ^  . 

124  See  Scd.ir.  Mc-as.  Lam.  §  44;    1  Suth.  Dam.  7s;    Wadswortb  v.  Telegraph 

Co.,  86  Teun.  721.  S  S.  W.  ')74. 


24  DAM.\r;Ks. 

hi  Msion  in  Iho  mind  of  (lie  iMlicr.  hiii  no  ii(ln:il  liarni  icsnlts.  (here  is 
no  cjinsr  of  action.'-"' 

WIhtc,  howevci".  tlio  fiii:Iit  or  shock  canscs  illness,  ncivons  ]tros- 
lialion.  or  any  other  physical  injuiy.  the  orij^inal  rault  is  the  pioximale 
(anse  of  tlio  itijnry;  and  c(tnijH'nsati(»n  may  lie  i-e(  i»\  cied.  not  toi-  the 
fri^dit.  but  for  the  resnlis  of  it.'-" 

^^'luM•e  the  fear  or  anxiety,  instead  of  caiisinu  the  physical  injury, 
accoinjianies  it,  as  a  concomitant  or  incident,  (he  injury  beinjj:  proved, 
compt  nsation  may  he  had  for  the  menial  snlTerinii.  The  jihysical  in- 
jiny  sujiporls  the  action.'-' 

And  it  is  often  dithcnll  to  tix  the  (hunaji^e.'^.  even  wlu're  injury  in  a 
le^sd  sense  results.'** 

lUit.  where  the  law  recounizos  a  riptht  to  comiiensation  for  an  injury, 
such  ditlicnlty  is  never  a  ground  for  withlnddinu  all  damages;  '-"  and 
the  ditlicnlty  is  solved  by  leaving  the  matter  to  the  sound  discretion 
of  a  jury.'-'^o 

M>  iifitl  Siijfii'inri  In  Acfiotis  of  Tort. 

<"omp('nsation  for  mental  sidlerinj;  which  is  the  natural,  proximate, 
and  certain  result  of  a  tort  may  be  recovered.'^' 

1-' o'l'lalicrty  v.  Kaihdad  Co..  .■{4  \\\\s.  Div.  74.  .".4  X.  Y.  Stipp.  ;>*i;  Cainiiiii: 
V.  Iiili:il.it:iiits  of  Wiiliaiiistown.  1  Cash.  (Mass.)  l.'.l ;  .\tcliisou.  T.  &  S.  F. 
It.  C^'i.  V.  McGiunis.  4f;  Kaii.  Hi'.i.  HU  I'ac.  4."):!;  Ft.  \^(prlh  &  D.  C.  \\\.  Co.  v. 
I'.urtnn  iTex.  App.)  ].">  S.  ^\■.  i;i7;  Wyiii.ui  v.  Lcavill.  71  Me.  227;  lOwinj;  v. 
ICailway  Co..  147  Ta.  St.  4o,  2.'i  All.  .".to.     Cdiitra,   Vealviuii   v.    Krot'^iiT  ('I'c.K. 

Civ.  App.t  27  s.  w.  !ir.:;. 

I ••:'••  Smith  V.  Railway  Co.,  :{0  .Minn.  t<;9,  14  .\.  W.  7'.i7:  WW  v.  It.iilway  Co., 
L.  R.  20  Jr.  428,  disapproving  Victorian  Hailwnys  Cuiii'is  v.  ('oulins.  V.\  .\pp. 
Cas.  222.  Contra,  MitclicII  v.  Railway  Co.,  l.'.l  N.  V.  I07,  4.'.  .\.  V..  .'..". I:  Wliite 
V.  S.iiulcr,  ir,S  Mass.  2'.m;,  47  N.  K.  90.  See,  also.  Fitzi)atrick  v.  Railway  Co., 
12  I'.  ('.  Q.  R.  (^45:  Oliver  v.  Town  of  La  Vallc,  ;{(;  Wis.  .'.1)2;  Wanvn  v.  Rail- 
n.a.l  C...  n;;;  .Ma.ss.  4K4,  40  N.  K.  SiK"). 

>-'•  (»'ll.'ilM'rly  v.  Railroad  Co..  \\\  .\pi..  Div.  71.  :a  \.  V.  Su|ip.  '.'<!:  .Mien 
V.  Railway  Co.  (Tex.  Civ.  App.)  27  S.  \V.  '.»!:;•.  I'eli  v.  It.iilruMd  Co.,  41  Fe.l. 
248. 

>i"  Waiiswrntii  V.  'r.l.-i:i|.li  C...,  SO  Teuu.  721,  8  .^.  W.  .".74. 

'■■•"  M. 

»•■">  Wadswuiiii  V.  'J'ele;,'i;ipii  Co..  S(»  Toiui.  <!'.►.".  S  S.  \\'.  .">7 1 :  r.nllon  v. 
FaiiMUii,  11  .Mlt'ii  (Mass. I  77,  7S. 

'•■>>  I'ersonal  Injury.  \;ni  l»i'  N'ciittT  v.  R.iiiway  Co.,  2i;  leii.  .■•.2:  l»riiili 
watpf  V.  Dinsiiiore.  in  linn.  2.".o:  R.-insum  v.  Raiiroail  Co..  1.")  .\.  V.  n.">; 
Curtis  V.  Railroad  Co..  18  N.  V.  r,::i;    Waili.-r  v.  Itailway  Co.,  (;;J  I'.aili.  (.\.   \.) 


KI.KMKNTS    OK    tOMTHNHATlON. 

Proxpective  M<iiinl  Sutf,  rim/. 

I);iiunj;<'S  nui.v  lie  rccovncd  for  |»ios|MMt  ivr  iiiciilnl  siifTi-i  in;:."' 

Jii  personal  injnr.v  cmsi's.  »laiii!i;4«'^  niay  Im-  iiiomtj-M  for  ;;ri<*f  an<l 
inortilication  which   will   he  cansfd   in   iht-  fiiiiin-  \\\    ,\\\\  htIouh  <I 
foiMiiitv  and  disliiinn  nirnl .' 

Dania^^cs  for  di-cad  of  hvdnt|ihnliia  niav  In*  rccovfifd  hv  (Mh-  wim  has 
been  bittru  by  a  doji.'" 

WhiU'compcnsat  ion  for  nuntal  snlVi-rinL:  ahuii   ciinntii  In*  r«Tov«'r«-<l. 
where  the  same  act  that  causes  menial  sntl'ciiii;^  also  injnics  |daintiir 

200;  DiMuauu  v.  linilroad  Co..  I'l  Misc.  \W\k  101,  :{(»  N.  Y.  S>ii)p.  irjC;  WabiiHh 
&  W.  Ry.  Co.  V.  Morjran.  V.Vl  Ind.  4:?0.  .31  N.  K.  tiCl.  and  :'.•-•  N.  K.  V,;  I-M.-iuIiip 
V.  Town  of  Shenandoali.  71  Iowa.  4.".r,.  .-{2  N.  W.  \T^i\\  Sidcknin  v.  H:iihv:iy 
Co..  93  Mo.  400,  4  S.  W.  701.  Assavdt  and  Hattcry.  nnlthor  v.  Hlnw. 
11  Md.  n-SO:  jMorpaii  v.  Ciuley.  142  Mass.  lo7.  7  N.  K.  72(5:  Mclntyn-  v. 
Giblin,  131  U.  S.  174,  Append.  Indecent  Assault.  Wi.lf  v.  Trinkle.  ln;5  Ind. 
355.  3  N.  E.  110;  Fay  v.  Swan,  44  Mich.  544,  7  N.  W.  21.1;  Ford  v.  J..ii<?», 
62  Barb.  (N.  Y.)  484.  Injury  to  Child— liecovory  hy  Tarcnl.  Durket-  v.  Knil- 
road  Co.,  56  Cal.  388.  Ciyil  Damage  Laws.  Black.  Intox.  Ll«i.  S  .'MK*:  Mnl- 
ford  V.  Clewoll.  21  Ohio  St.  191.  Ejection  of  Fas.sen^'er  by  Carrier.  r..pplii 
T.  Braithwaite.  8  .Tin-.  875;  (iallena  y.  Railroad  Co..  13  Fed.  116;  Hiiffnian  r. 
Railroad  Co.,  45  Minn.  53,  47  X.  W.  :U2;  Hamilton  y.  Railroad  Co..  5.3  N.  Y. 
25;  Dorrah  v.  Railroad  Co..  65  Miss.  14.  3  South.  .36;  Chicago  &  A.  U.  Co. 
y.  Flagg.  43  111.  3(M.  False  Imprisonment.  Jay  v.  Almy.  1  Wo<Mlb.  &  M.  2«S, 
Fed.  Cas.  No.  7,236;  ratlin  v.  Vo\\i\.  Uil  N.  Y.  (•>49.  5  N.  E.  41.  Mall.-lous 
Prosecution.  Parkhurst  v.  Mastcllcr.  .")7  Iowa.  474.  lo  N.  W.  *«V»;  Fngnnu 
V.  Knox.  40  N.  Y.  Suiicr.  Ct.  41;  Whccl.-r  v.  Hanson,  ic.l  Mass.  .37n.  .37  N.  B. 
382.  Libel;  Slander.  Sliattuc  v.  McArthur.  2tt  Fed.  K'^".;  Tcrwillijier  v.  Wands. 
17  N.  Y.  54;  Wilson  v.  Coir.  Id.  442;  Sanuiels  v.  Asswiation.  «5  Hun  i\.  Y.»  5: 
Hamilton  y.  Eno.  16  Ilun  (X.  Y.)  599:  Lombard  v.  Lennox.  155  Mas.-*.  70.  28 
N.  E.  1125;  Warner  y.  Publishinfr  Co..  132  X.  Y.  isl.  .3o  X.  E.  :VX\.  S.Hluctlou 
and  Criminal  Conversation.  Irwin  v.  I>.nrnian.  11  East.  23;  BarlH»ur  v. 
Stephenson.  32  Fed.  66;  .Johnston  y.  I>isbn.w.  47  Mich.  .''i9.  in  N.  W.  73; 
Emery  v.  Goweu.  4  Me.  33;  Hatch  v.  Fuller.  131  .Mass.  .574;  Lli>«»  v.  El»en- 
lerd,  32  N.  Y.  229.  Abduction  of  Children.  Magce  v.  Hollnnd.  27  X.  J.  Law. 
86;   Stowe  y.  Heywood.  7  Allen  (Mass.i  118. 

132  Matteson  v.  Railroad  Co..  62  Barb.  tX.  Y.>  3«'.4;  Memphis  A:  C.  R.  Co. 
V.  Whitfield,  44  Miss.  466;   South  &  X.  A.  R.  Co.  v.  M<Lend  .n.  U3  \\a.  2'-.''.. 

i33Heddles  y.  Railway  Co..  77  Wis.  22.*^.  4t;  X.  W.  115;  P,.wor  v.  Harlow. 
57  Mich.  107.  23  X.  W.  ('.(m;.  Contra.  Cliicaixo.  B.  A:  Q-  R.  Co.  v,  HInos.  45 
111.  App.  299;  Chicago.  R.  I.  \-  I'.  Ky.  Co.  y.  Caiilii.ld,  11  C.  C.  A.  552,  G3  Fed. 
396. 

134  Godeau  v.  Blood.  52  Vt.  2.">1. 


•J()  DA  MACKS. 

ill  icsiH'cl  to  ii  ri^lil  indlcclcd  Ity  l;i\\.  ;is  in  ic^.inl  t(t  liis  jtci'son, 
]ir(»iM'it  \ .  or  ir]nii;ilioii.  ilir  liiw,  ill  icdicssinu  such  in  jury,  will  also 
award  to  ]ilainlilV  a  suilaldr  ((iniiimsat  ion  Cor  his  nicntal  sufft'rinfjj, 
considrrcd  as  an  insi]iaraltl('  [laii  of  tin'  jiciicral  risnll  of  tlie  tort 
airainst  liini.^^^ 

MintaJ  Sulferi))(/  in  Act  inns  of  (nufrdcf. 

Ijion  ihc  quest  i<tn  as  lo  w  hclhcr  damaj^ics  arc  recovorable  for  mental 
sun<  rin>:  resulting;  from  a  breach  of  contract,  the  authorities  are  in 
conllict.  It  has  been  held  that  such  daniaj;es  as  are  recoverable  are 
subject  to  the  jj^eneral  limitation  that  damages  for  the  breach  of  a  con- 
tract must  be  jiroximate,  certain,  and  contemplated  at  the  time  the  con- 
tract was  made.^^® 

The  breach  of  a  promise  of  marriaj^e  has  always  been  regarded  as 
an  exception.  aiKl  damages  for  mental  suffering  allowed.^ ^^ 

Actions  against  telegraph  companies  for  delay  or  failure  to  deliNcr 
messages  const itnt(^  by  fai-  the  most  numerous  class  of  cases  in  which 
this  (piestion  has  been  raised. 

In  the  case  of  So  Relle  v.  Telegraph  ro.,^='»  it  was  held  that  the  ad- 
dressee of  a  telegraphic  message  could  recover,  as  compensator^'  dam- 
ages, for  the  failure  to  deliver  ])ronii)tly  a  message  announcing  the 
death  of  his  niothei'.  by  reason  of  which  delay  he  was  ]>revented  from 
attending  hei-  funeial.  And  it  is  now  well  established  in  Texas  that, 
where  the  ualuie  of  the  message  is  su(  li  as  to  ajipiise  tin-  conijiany 
that  mental  stilVering  will  i-esult   from  delay  or  failui-e  to  tiansniit  it, 

138  Lynch  V.  Kni^Mil.  :»  H.  I..  (":is.  r.TT:  O'KlMlicny  v.  It.-iilniMd  Vi,..  :U  App. 
I»iv.  74.  r>4  .N.  V.  Suiip.  !ir,:  Tri^'-  v.  i:.iil\v;iy  Ci...  74  Mo.  147;  linructl  v. 
■|'cl.';.'r:ipli  ("(I..  :;'.»  Mn.  Aiip.  .V.i!i:  W.  f.  irl.  Co.  V.  i;(i>:crs.  ('►.S  Miss.  74S.  «> 
Siiuili.  S"J.",:  SiiinimTlit'ld  v.  Telt';;rii|>li  Cd.,  ,S7  Wis.  1,  .",7  .\.  W.  •»7;{;  ('li:ii>iii;in 
V.  'J"clc;:nii)li  Co..  JM»  Ky.  LMm.  1;{  S.  "W.  SNO. 

11'  W.iilsworlli  V.  'Jclc-i:ipli  Co..  H\  Tciiii.  tlUft.  7ii;{.  S  S.  ^^■.  .".71.  Contra, 
l-niiicis  V.  'I'elc^riMpli  Cd..  .".s  .Miiiii.  LTil',  .")!)  X.  \V.  1(»7N.  In  tlic  lollowiii;:  cases 
iiH'iilal  siilTiriiiK  lias  liccii  held  too  rcniutc  or  uiKXpcricd  to  lie  c(iiiip('iisatetl: 
I'.caslt-y  V.  'rclc;:ra|ili  Cd.,  :'.'.»  I'cil.  ls|;  WClls.  I'ai-^ro  \-  Co.'s  E.xpross  V. 
Iiilii  r.  »  'I'.'X.  Civ.  Apj).  •1V.\,  li.'.  S.  W.  ML':  .Mrjiols  v.  Jlild.v  ('{'ex.  Civ.  App.) 
_■»  S.  W.  :;i(J;   Tliiimpsdii  V.  'rcle;:ra|.li  C...   In7  .\.  C.    I  l!».   VI  S.  i:.  427. 

'•■'■CdlJiiiK  V.  .Mack.  :'.!  Arl<.  list;  Clidlis  v.  Cliapmaii.  12.".  .\.  V.  222.  2(". 
.N.  E.  .'{OS;  SluTiiiaii  V.  i)a\vsoii.  lirj  .Mass.  M'.i.".,  'M\);  Jobusou  V.  Jculiius,  24 
N.  Y.  2r.2:    Tlioni  v.  J<ii.ii.|.,  42  N.   Y.  474. 

iao  Tm  Tex.  o08. 


AGCKAVAllo.N     AMI    .MIII<;ATI<>N    nK    DAMA'.FS.  i.  i 

(•(iiii|i(  nsation   for  such   siillVi  iii^^  i;iii   Im-   riMuvt-ri-d.    ili(iii;.'li    ii<>t    ion 
ncclcd  witli  ;in.\  plivsical  iiijiny  or  |HMUiiiaiv  loss.'^" 

The  ''Texas   Doctiine"   has   liccii    followed    in    soiin-   oiIkt  jiiiisdi< 
tions/*"  but  roimdiated  in  others,  iiu-ludiu^'  the  fed. Mai  roiiits.'*' 
Damages  for  Mtnital  Suffering  Compenmton/,  imf  f'.'.n  iii/>l<iri/. 

Damajfes  for  mental  suffering',  when  allowed  at  all.  are  piiielv  .-oni 
pensatory,  not  exemplary,  vindictive,  or  jtuniiive.'*- 

AGGRAVATION  AND  MITIGATION  OF  DAMAGES. 

23.  Where  damages  are  not  capable  of  exact  pecuniary 
measurement,  but  must  be  left  to  the  discretion 
of  a  jury,  evidence  of  the  circumstances  of  the 
wrong  addressed  to  the  jury  for  the  purpose  of 
influencing  its  estimate  is  said  to  be  in  aggravation 
or  mitigation  of  damages. 

Tlie  terms  "ajij^ravation '  and  "mitif^ation"  of  damajros  are  proiteriy 
used  only  where  the  damages  are  incapahle  of  exact  iK'cuniary  meas- 
urement. Indemnity  is  the  aim  of  the  law.  ^\^lere  the  exact  los«  is 
detinitely  known,  the  damajjes  cannot  be  mitigated  to  less  than  full  and 
complete  compensation;  nor  can  they  be  aggravated  to  more  than  tliat 
amount,  unless  the  circumstances  justify  the  imposition  of  exemi>lary 
damages.     These  terms  are  sometimes  loosely  used  to  mean  eviden«'e 

i30Loper  v.  Telegraph  Co..  TO  Tex.  (380.  8  S.  W.  »•.<•<.;  W.  U.  Tel.  Co.  v. 
Broesche,  72  Tex.  054,  10  S.  W.  TM-  W.  U.  Tel.  Co.  v.  K..s,.ntreter.  SO  Tex. 
400,  IG  S.  W.  25. 

140  W.  U.  Tel.  Co.  V.  Henderson.  89  -\la.  510,  7  i^o\\\\\.   4T.t:    ('hai)inaii 
Telegraph  Co.,  90  Ky.  205,  13  S.  W.  SSO. 

141  Curtin  V.  Telegraph  Co.,  13  App.  Div.  2.5;i.  42  N.  Y.  Supp-  H<«:  Francia 
V.  Telegraph  Co.,  58  Miuu.  252,  50  N.  W.  KtTS:  W.  U.  Tel.  Co.  v.  Hnpers.  «;s 
Miss  748,  9  South.  823;  SuimnertieUl  v.  Tele^-raph  Co..  87  Wis.  1.  .'.7  N.  ^^■. 
973;  Chapman  v.  Telegraph  Co.,  88  .Ja.  T.;:;.  I.".  S.  K.  901;  International 
Ocean  Tel  Co.  v.  Saunders.  32  Fla.  4X4.  14  Snu.h.  14S:  Chase  v.  Telegraph 
Co  44  Fed.  5M;  Craxvson  v.  Telegraph  Co..  47  Fed.  544.  And  see  note  by 
Wm  L  Clark.  Jr.,  in  W.  U.  Tel.  Co.  v.  Coggiu.  15  C.  C.  .\.  2:r..  "naniages  in 
Actions  against  Telegraph  Companies."  See.  also.  Lynch  v.  Knight.  9  IT 
L   Cas.  577.  per  Lord  Wensleydale. 

142  Smith  V.  Overby,  30  Ga.  241;    Bixby  v.  Duulap.  50  N.  U.  4.-^);    Th..i..,. 

Elect.  §  382. 


28  DAM  AUKS. 

of  jmytliiiiu:  that  tends  io  iiicicasc  or  dccrcaso  llio  damages,  Itiil  the 
juopcr  sense  is  that  indicated  above. 

It  is  for  the  jnry  to  say  wliether  the  matters  given  in  evidence 
aggravate  or  mitigate  the  damages.  It  is  not  a  qnestion  of  hiw  for 
1  he  court.'''' 

"Nevertlieless,  certain  rules  as  to  the  effect  of  some  common  circum- 
stances (such  as  i)rovo(ation,  good  faith,  tlie  position  of  the  parties, 
etc.)  in  aggravating  or  mitigating  the  damages  liave  been  laid  down, 
and  are  followed  in  ordinary-  cases,  though,  as  has  been  said,  they 
should  not  be  regarded  as  conclusive.  These  rules  are  api)lied  in 
actions  of  breach  of  promise  of  marriage  and  of  tort  for  personal  in- 
jury, and  in  all  actions  where  exemplary  damages  are  allowed."  ^** 

Ordinarily,  evidence  in  aggravation  or  mitigation  of  damages,  in  the 
strict  sense,  is  inadmissible  in  actions  of  contract.  And  in  such  actions 
the  defendant's  motive  or  intention  in  breaking  the  contract  is  not  an 
element  in  the  case,  unless  it  belongs  directly  to  the  issue.^*^ 

If  the  person  injured  thereafter  negligently  suffeis  his  loss  to  be 
enhanced,  the  incr<'ase  so  occasioned  cannot  be  recovered  from  the 
I)erson  who  first  violated  his  contract  or  duty;  and  in  some  cases  it  is 
incumbent  on  the  person  damnified  to  take  such  active  measures  as  he 
reasonably  may  to  minimize  the  damages  naturally  tlowing  from  the 
bi-each.^*° 

Apart  from  the  principles  of  aggravation  and  mitigation,  in  their 
strict  sense,  the  special  circumstances  of  given  cases,  or  special  i)ro- 
visions  of  given  contracts,  may,  of  course,  modify  the  general  rules 
which  would  be  applicable  under  ordinary  circumstances,  and  operate, 
according  to  their  nature,  to  either  increase  or  lessen  the  damages 
recoverable.  Thus,  where  rooms  were  let,  with  table  board,  for  a  fixed 
pciind  ;iii(l  s})ecified  weekly  |);iynient,  ''with  no  dednclion  in  case  of 
alisciicc,""  and  the  Ixtarder  left  pending  the  term,  it  was  held  that  he 

'*  ■  Osimui  V.  W'iiiti'i's,  27,  Or.  L'liU.  ;>,'>  I'ac.  2.')0. 

' '<  Scdg.  Dam.  §  r>li.  Sec.  j,'ciicrally,  as  to  ajJCf-'ravation  and  iniliuatioii  of 
dainaKi'S,  Grable  v.  Margrave.  .•',  Scam.  (111.)  37*J;  Storey  v.  Karl.v.  sc,  111.  ici; 
Sayro  v.  Sayre.  2'>  N.  J.  Law.  SW,;  Duval  v.  Davey,  32  Ohio  St.  Ciil.  M.ilu.iicy 
V.  Bclfonl.  r.'.2  Mass.  liU:',;  Siiilivaii  v.  Kailway  Co.,  1G2  Mass.  oMi,  3;»  .N.  E. 
185. 

It"  3  I'ar.s.  Cont.  1G7;    Anson,  Cout.  311. 

i*«  Allcu  v.  McCuuihe,  124  N.  Y.  317,  20  X.  E.  812;    1  Siilh.  Dam.  118. 


AGGUAVATION    AND    MITICATION    OK    DAMAGES.  20 

was  liablo  to  llic  otlici-  pailv,  nol   nuTcly  fuf  |»i(»s|m(  ii\c  |iiutils.  Init 
for  tlic  full  contract  i>ricc.' '' 

!r^o.  wliilc,  in  an  action  for  convcision  of  inoiicrl  \  (if  llinliialiii;:  v;ili)f, 
the  market  valnc  for  a  rcasonalth-  linn\  in  wliidi  to  iciiImcc  tli<-  piop 
erty,  furnishes  the  guide  to  the  proper  measure  of  damagt's.'*"  vet. 
if  there  is  no  market,  and  no  market  vahie,  and  in  the  mIisiihi  of  special 
circumstances,  the  vahie  at  the  time  of  conversion,  wiiii  iiii<i»'st.  is 
the  measure  of  comi)ensa1ion.'''" 

So,  apiin,  if  on<'  who  is  intrusted  witli  property  to  he  dispond  of 
according-  to  a  contract  between  tlie  parlies,  and  an  action  is  l»ron<:lii 
against  him  by  the  other  jiarty  for  a  conversion  thcici.l  iisuliing  in 
loss  to  the  plaintiiT,  the  defendant  cannot  resort  to  the  contiact  which 
he  has  abandoned  for  the  laujtose  of  diminishing  his  liability,  or  »<• 
establish  the  measure  of  damages.^ ''^ 

lUustratloiu. 

In  assault  and  battery,  leave  and  license,^"  and  provocntion.^'-  ;ir.- 
in  mitigation  of  damages.^"' 

In  false  imprisonment,  wanton  disregard  of  legal  i  iglii  entitles  tlie 
plaintiff  to  punitive  damages.^ ^* 

So,  proof  of  malice  in  defamation  aggravates  the  wrong  in  libel  ;ind 
slander,  while  whatever  negatives  malice  operates  to  mitigate  dam 

gggg    155 

Provocation  may  mitigate  damages;  '^®  and  so  may  a  retraction  of 
defamatory  statements,  or  proof  of  honest  belief  in  rumors.'-''  or  pioof 
of  plaintilf's  previously  blemished  character,  or  general  bad  reiiuta- 

tiOD.^^* 

14T  -Wilkinson  v.  Davies.  l-W  X.  Y.  25.  40  N.  E.  ."01. 

148  Baker  v.  Drake,  53  N.  Y.  211. 

i4»  Barnes  v.  Brown,  130  N.  Y.  372.  20  N.  E.  TCO. 

150  H.vnos  V.  Patterson.  05  X.  Y.  0. 

151  Fredericksen  v.  Manufacturing  Co..  38  Minn.  3.'<^  37  N.  W.  453. 

152  Kief  V.  Youmans.  SO  N.  Y.  324. 

153  Cf.  Birchard  v.  Booth,  4  Wis.  70;  Goldsmith's  Adni'r  v.  Jny.  01  Vt.  4ks. 
17  Atl.  1010. 

154  Ball  V.  Horrigan.  05  Hun.  021.  10  X.  Y.  Supp.  013. 

155  Cruikshank  v.  Gordon.  US  X.  Y.  178.  23  X.  E.  457. 

156  Tarpley  v.  Blabey,  2  Bing.  X.  C.  437. 

157  Turton  v.  Recorder  Co..  144  X.  Y.  144.  as  X.  E.  looi>-.  Xelson  v.  Wallace, 
48  Mo.  App.  103. 

158  Ward  v.  Dean,  57  Hun,  585,  10  X.  Y.  Supp.  421;    Earl  of  Leicester  v. 


30  DAMAGKS. 

24.  An  injured  party  cannot   be   compelled  to  accept  spe- 

cific reparation  in  lieu  of  damages;  but,  if  he  does 
so  voluntarily,  it  will  operate  as  a  reduction  of 
damages. ''•' 

EXEMPLARY  DAMAGES. 

25.  Exemplary,  punitive,  or  vindictive  damages  are  dam- 

ages awarded  in  addition  to  compensation  as  a  pun- 
ishment to  the  defendant,  and  as  a  warning  to 
other  w^rongdoers. 

26.  The  authorities  are  in  great  conflict  as  to  whether  ex- 

emplary damages  can  ever  be  allowed. 

(a)  In  some  jurisdictions,  exemplary  damages  cannot  be 

recovered."^ 

(b)  In  a  few  jurisdictions,  exemplary  damages,  so  called, 

may  be  recovered,  but  they  are,  in  fact,  compen- 
satory.'^' 

(c)  In  most  jurisdictions,  exemplary  damages  may  be  re- 

covered in  cases  of  aggravated  torts.  "^- 

The  doctrine  of  exemplary  damages  is  anomalous  and  illogical.  '"It 
has  been  suffered  to  lean  upon  and  sui)port  itself  by  the  sup])0sed 
weight  of  authority,  rather  than  to  stand  upon  principle  and  inherent 
strength."  i«3 

Walter,  2  Canu).  25t;  Hallam  v.  Publishing  Co.,  55  Fed.  450;  Post  Pub.  Co. 
V.  Hallam.  8  C.  C.  A.  201,  .59  Fod.  530. 

i''»Xoniian  v.  Uo^'ers.  20  Ark.  ."^05;  Livermore  v.  Xortlirup.  44  N.  Y.  107; 
McConnick  v.  IJailroad  Co..  80  N.  Y.  3.5:?;    Porham  v.  Coney,  117  Mass.  102. 

laoStilsou  V.  Gibbs,  63  Mich.  280.  18  N.  \\'.  sl5;  Murphy  v.  Ilobb.s.  7  Colo. 
541.  5  Pac.  119;   Fay  v.  Parker,  53  N.  H.  342. 

101  Pegram  v.  Stortz,  31  W.  Va.  220,  G  S.  E.  485,  now  overruled.  Mayer  v. 
Probe,  40  W.  Va.  240,  22  S.  E.  58;  Quigley  v.  Railroad  Co..  11  Xev.  350; 
.Stuyvesant  v.  Wilcox,  92  Mich.  233,  52  N.  W.  4^)7. 

162  Day  V.  Woodworth,  13  How.  363,  371;  Voltz  v.  Blaekniar,  04  N.  Y.  444; 
Eml)len  v,  Myers,  6  Hurl.  &  N.  54;  Milwaukee  &  St.  P.  Uy.  Co.  v.  Arms,  91 
V.  S.  489;  Missouri  Pac.  Ry.  Co.  v.  Humes,  115  V.  8.  512.  (5  Sup.  Ct.  110; 
I'.uiKly  V.  .Maginess.  70  Gal.  532,  IS  Pac.  008;    Daltou  v.  Beers.  38  Conn.  529. 

iiJ-  Field,  Dam.  p.  79. 


KXKMrLAKV     iJAMAliKS.  31 

The  fact  remains,  liowcver,  thai,  in  a  vast  IkmIv  of  (Iicisioiis.  (la;iia;,'cs 
have  been  allowed  strictly  in  pdMiam.  The  doctrine  of  these  cases  is 
to  be  sustained,  if  at  all,  mainly  on  the  groimd  of  antliority.'"* 

27.  WHEN  RECOVERABLE— In  jurisdictions  where  ex- 
emplary damages  are  allowed,  they  can  be  recov- 
ered only  in  actions  of  tort," '  and  when  the  tort  is 
accompanied  by  violence,  oppression,  gross  negli- 
gence, malice,  or  fraud. 
EXCEPTIONS — (a)  Exemplary  damages  may  be  recov- 
ered for  breach  of  promise  of  marriage."' 

(b)  In  a  few  states  exemplary  damages   may   be   recov- 

ered  in   an   action  on  a  statutory  bond,  where   the 
breach  of  condition  w^as  a  tort."" 

(c)  In  some  jurisdictions,  exemplary  damages  cannot  be 

recovered  where  the  tort  is  also  a  crime  "■* 

Exemplary  damages,  being  designed  to  jmnisli  tlu^  wiongdoer.  can  he 
justified  only  where  the  wrong  was  willful  or  wanton;  and  their  allow- 
ance is  Hmited  to  that  class  of  cases.^*^**  Good  faith,^^*^  and  provo- 
cation,^ ^^  may  be  shown  in  mitigation. 

It  is  the  province  of  the  court  to  determine  whether  there  is  any 
evidence  to  support  an  award  of  exemplary  damages,^"  and  of  the 

164  Sedg.  Dam.  §  .354. 

lesSedg.  Dam.  §  370;  Anson,  Cont.  .311:  Gniklfoi-a  v.  Stoamsliii)  Co..  9 
Can.  Sup.  Ct.  303;    Murdoclv  v.  Railroad  Co.,  133  Mass.  15. 

166  Johnson  v.  .Jenkins,  24  X.  Y.  252;  Chellis  v.  Chapman.  125  N.  Y.  214.  2i; 
N.  E.  308. 

167  Floyd  v.  Hamilton,  33  Ala.  2.35.     Contra.  Cobb  v.  IVopK'.  M  111.  511. 

168  Murphy  v.  Hobbs,  7  Colo.  541,  5  Pac.  11!).  Contra.  Cook  v.  Ellis.  <>  Hill 
(N.  Y.)  466.    But  see  People  v.  Meakini,  133  N.  Y.  225.  30  N.  E.  828. 

169  Huling  V.  Henderson.  161  Pa.  St.  5.53,  29  Atl.  276;  Con.solidated  Coal  Co. 
V.  Haenni,  146  111.  628,  35  N.  E.  162;  Reeder  v.  Purdy.  48  111.  261;  Moore  v. 
Crose,  43  Ind.  30:  Brown  v.  Allen,  .35  Iowa.  .306;  U.  S.  v.  Taylor.  35  Fed.  484; 
Ames  v.  Hilton.  70  Me.  36;  Sapp  v.  Railway  Co..  51  Md.  115;  Railway  Co.  v. 
Lee,  90  Tenn.  570.  18  S.  W.  2(>S;  Hamilton  v.  Railroad  Co..  53  X.  Y.  25;  Yates 
V.  Railroad  Co.,  67  X.  Y.  100:   Caldwell  v.  Steamboat  Co.,  47  X.  Y.  282. 

17  0  Millard  v.  Brown.  35  X.  Y.  297. 

1-1  Kiff  V.  Youmans.  86  X.  Y.  .331. 

1T2  Chicago,  St.  L.  &  X.  O.  R.  Co.  v.  Scurr,  59  Miss.  456. 


32 


DAMAGES. 


jniv  to  (Icifi  iiiinc  wliclhci-  oi-  not  such  (l:iiiiii«i(>s  slinnld  bo  awarded.''-^ 
In  suits  in  e»|uity,  exemplary  da^na^cs  arc  never  jj;iven.^^* 
When  tlie  ciirunistances  justify  it,  exemplary  damajjes  may  be  re- 
covered in  actions  for  assault  and  battery,^^'^  false  imprisonment/^* 
malicious  proseiut ion,' " "  defauuilion.^'^ 

The  falsity  of  the  defamation  is  evidence  of  malice,^""  willful  inju- 
ries to  person^*''  or  property, ^'^^  and  in  actions  of  trover  ^^-  and  re- 
plevin.^^^ 

In  actions  founded  on  loss  of  service,  as  for  enticement,^^*  seduc- 
tion.'''^ ciiminal  conversation,'-"  and  for  haiboiinj;'  plaintiff's  wife/^^ 
exemplary  danuiges  may  be  recoA'ercd. 

In  case  of  physical  injury  to  a  child  or  servant,  exeni}tlary  damages 
can  be  recovered  only  in  an  action  by  the  child  or  servant.  They 
cannot  be  recovered  in  an  action  by  the  master  or  parent  for  loss  of 
services.* 

AATiere  a  wrongdoer  dies  before  tiial,  only  compensatory  damages 
can  be  recovered  against  his  estate.  The  liability  to  exemplary  dam- 
ages does  not  survive.' ^^ 

I'-i  Pratt  V.  rond,  42  Conn.  .318. 

1'*  Kinl  V.  Ilaih-oad  Co..  8  Rich.  Kq.  (S.  C.l  M>. 

I'SConners  v.  AVulish.  1.31  N.  Y.  .V.)(»,  .30  X.  E.  50;  Buiuly  v.  Maginess,  76 
Cal.  .o32,  18  Tac.  (iCiS;   Cook  v.  Ellis,  0  Hill  (N.  Y.)  40(5. 

1T6  Huckle  V.  Money,  2  Wils.  205. 

1T7  Donnell  v.  .Jouos.  1.3  Ala.  490. 

i-s  Philadt'lphia,  W.  &  B.  K.  Co.  v.  Qiiijilcy.  21  How.  202. 

179  Kergnianii  v.  .Toiii's.  04  N.  Y.  'A.  .Sec  Holmes  v.  Jones,  147  N.  Y.  (u,  41 
X.  E.  400;   Swain  v.  Scliieffelin.  1.34  X.  Y.  474.  :',\  X.  E.  1025. 

isoDalton  v.  Beers,  38  Conn.  529. 

1"  U.  S.  V.  Taylor,  35  Fed.  484;  Allaback  v.  Utt.  51  X.  Y.  (m1. 

i»2  Dennis  v.  Barber,  (J  Serg.  &  K.  (Pa.)  420.  Contra,  Berry  v.  Vantries,  12 
Scrg.  &.  K.  (Pa.)  s;i. 

!><:'•  Cable  V.  D.-ikin,  20  Wend.  (X.  Y.)  172. 

1*-+  Sniiili  V.  (Joodnian,  75  (ia.  108. 

i*-'- Kol)inson  v.  Burton,  5  Har.  (Del.)  3.35. 

I''"  .Tohiiston  V.  Disbrow.  47  Mich.  50.  10  X.  W.  79. 

1H7  .loliiison  V.  Allen.  100  X.  C.  131,  5  S.  E.  UG1>. 

♦Whitney  v.  Hitchcock,  4  Denio  (X.  Y.)  4(jl. 

ISO  Edwards  v.  Kicks,  30  La.  Ann.  920;    Kipin-y  v.  Miller,  33  X.  C.  247. 


LIABILITY    Of    riUNCll'AL    KOK    A<  T    OK    AGKNT. 


LIABILITY  OF  PRINCIPAL  FOR  ACT  OF  AGENT. 

28.  A  prncioal  is  not  liable  to  exemplary  damages  for  the 
tort  o^  his  agent  or  servant,  unless  he  authorized  or 
ratified  the  act  as  it  was  performed,  or  was  liimself 
guilty  of  negligence.'" 
EXCEPTION  —  In  some  jurisdictions,  if  the  principal  is 
liable  for  compensatory  damages,  he  is  liable  also 
for  exemplary  damages,  if  the  agent  or  servant 
would  be.'"" 

LiahUlty  of  Corporations. 

It  is  usually  held  that  corporations  are  liable  to  exeraphuv  (l:nnaj;es 
for  the  acts  of  their  agents  or  servants  in  cases  where  the  agent  or 
servant  would  be  liable  to  such  damages.^" 

In  many  jurisdictions,  however,  the  same  rule  is  appli<'d  to  corpura 
tions  as  is  applied  to  individuals,  and  tlie  corporation  is  not   li;il.I<' 
unless  it  authorized  or  ratified  the  act,  or  is  otlicrwise  responsil.li'  f..r 

189  The  Amiable  Nancy.  3  Wheat.  54G;  rollock  v.  Gantt.  r,0  Ala.  .37.3;  Lieii- 
kaiif  V.  Morris,  6(5  Ala.  406;   Burns  v.  Camphell,  71  Ala.  271;    Freese  v.  Tripp.. 

70  111.  496. 

190  Southern  Exp.  Co.  v.  Brown.  67  Mi.>;s.  l.r.0,  7  South.  318.  and  S  Smith. 
42.5.     Cf.  Cleghorn  v.  Eailroarl  Co..  '^i\  N.  Y.  44. 

191  Citizens"  St.  Ry.  Co.  v.  Steen.  42  Ark.  321;  Illinois  Cent.  Ry.  Co.  v.  Ham- 
mer, 72  111.  3.53;  Southern  Kansas  R.  Co.  v.  Rice,  3S  Kan.  308.  16  Tac.  817; 
Goddard  V.  Railway  Co.,  .57  Me.  202;  Perkins  v.  Railroad  Co..  55  Mo.  201: 
Belknap  v.  Railroad  Co.,  49  N.  H.  358;    Quinn  v.  Railway  Co..  29  S.  C.  381.  7 

S.  E.  614. 

192  Cleshorn  v.  Railroad  Co..  .56  N.  Y.  44;  City  Nat.  Bank  v.  .Teflfries.  T.\ 
Ala.  183;  Murphy  v.  Railroad  Co.,  48  N.  Y.  Super.  Ct.  96;  Keil  v.  Gas  Co..  131 
Pa.  St.  466,  19  Atl.  78;  Hagan  v.  Railroad  Co.,  3  R.  I.  88;  Lake  Shore  &  >L  S. 
Ry.  Co.  v.  Prentice.  147  U.  S.  101,  13  Sup.  Ct.  261. 

CHAP.DAM.— 3 


34  i)A.M.\(ii:s. 


AVOIDABLE  CONSEQUENCES. 

29.  Compensation  cannot  be  recovered  for  injuries  which 
the  injured  party,  by  due  and  reasonable  diligence, 
after  notice  of  the  ^vrong,  could  have  avoided. 
Such  consequences  are  regarded  as  remote,  the  in- 
jured party's  will  having  intervened  as  an  inde- 
pendent cause.  "^ 

Tile  rule  applies  in  an  ad  ion  aj^ainsl  a  carrier  for  ndmldi  very,  wliei'c 
Uw  consijinee  can  protect  himself  ajiainst  loss  by  a  ]>nr(liase  in  llic 
niark.'t.^^* 

\\  liL-re  an  employ^  is  \vr(»njifnliy  discliarjied  liefore  the  expiration 
of  the  term  of  service,  he  must  seek  other  employment;  and  the  meas- 
ure of  daniajres  is  the  difference  between  what  he  might  have  earned 
ami  what  he  should  have  I'cccived  under  his  contract.^"'' 

Reasonable  dilijjeuce  in  scckinu  otlici'  cniployuK'nt  docs  not  requiie 
one  to  accept  employment  of  an  entirely  dilTerent  or  inferior  sort,  or 
to  abandon  one's  home  and  place  of  residence.^ "^ 

liule  of  Contrlhutonj  Neglujence  Dhtin<juix}K'd. 

The  rule  of  avoidable  consequences  must  not  be  confounded  wiih 
that  of  contributory  negligence,  though  their  results  are  somewhat 
similar.  Contributory  negligence  is  a  complete  ])ar  to  tlu^  mainte- 
nance of  the  action.     \\    defeats  the  right   to   recovei'  any  damages 

103  lx)kc'r  V.  Damon,  17  Tick.  (Mass.)  284;  Indiaiiapitlis.  W.  &  W.  Ky.  Co.  v. 
Hlrnoy,  71  111.  .'{Ill;  Salladay  v.  Town  of  Dodgeville.  S.-j  Wis.  318,  .">  N.  W. 
<i!M;;  Hrant  v.  Callup.  Ill  III.  -487;  (Jrludli,'  v.  E.xpivss  Co..  <i7  Mo.  :U7:  Siitlicr- 
larid  V.  WyfT.  Id.  C)t.;  Siiiiijsoii  v.  City  of  Keokuk.  .'{4  Iowa,  nc,8;  Watkiiis  v. 
Kist,  f;7  ^■t.  284.  :n  Atl.  4i:{;  Thomp.son  v.  Shaltuck,  2  .Mctc.  iMass.)  CI.-,;  Sli.T- 
tiian  Center  Town  Co.  v.  Leonard,  40  Kan.  .■{.->4,  20  Pac.  717. 

ii'«  Scott  V.  Steaniship  Co..  Km;  Mass.    jc.s. 

>"••  Walwortli  V.  Tool.  0  Ark.  :!!)4;  .M.Daniel  v.  raii<s.  T.t  AiU.  c,71:  Sutl)er- 
land  V.  \Vy«T.  c,7  .Mc  c^l;  Hoyt  v.  Wildlire.  ."{  .Pdins.  iX.  V.i  .".is;  Slianm.n  v. 
Coinstock.  21  W.-nd.  (N.  Y.i  I.-.7;  II. .ward  v.  Daly.  (;i  .\.  V.  :M2;  II. 'O.lii.  Us. m 
V.  AmliTsoii,  .-.0  N.  C.  2IC,:    Kiu^'  v.  St.ir.Ti,  II  I'a.  St.  '.tit;    (J.ir.l.m  v.  lir.'wstcr. 

7  Wis.  :'..-..-.. 

't"»  Williams  V.  (u.d  Co.,  ('/)  111.  14;>;  C..stiy:an  v.  Railroad  Co..  2  Denio  (N. 
Y.)  COf);  Howard  v.  Daly,  01  N.  Y.  302;  Fiiclis  v.  Koeruor,  107  N.  Y.  529,  14  N. 
i:.  415. 


Nominal  i)AMAnF:.s.  a** 

whafcvcr.  On  tlic  oOh  r  li;iiii].  iIh-  iiilf  df  jnuid.ililf  (•»iiis»r|iifiicr».  pp 
supposes  Ji  valid  ( misc  nf  ariioii.  Il  has  no  a|i]ilir;itiitii  mitil  a  rii^lit 
to  rt't'ovci-  some  daiiia^cs  at  all  events  lias  arisen,  and  then  it  <t|H  lateM 
merely  to  reduce  the  amount  of  lecoveiy.  It  lannut  enlirelv  defeat 
the  action.  Thon<j;h  plaint  ill"  mi^^ht  ha\c  a\(»ided  ihe  entire  hmn,  yet, 
if  an  absolute  rij^ht  was  in\aded.  he  is  entitled  \o  nominal  daniaKcu."^ 

NOMINAL  DAMAGES— DEFINITION  AND  GENERAL  NATURE. 

30.  Nominal  damages  are  damages  insignificant  in  amount; 

a  sum  of  money  that  can  be  spoken  of,  but  lias  no 
existence  in  point  of  quantity. 

31.  Nominal   damages   are   a^varded    only    in  cases  v^here 

the  la"w  presumes  damage.  Whenever  the  law  pre- 
sumes damage,  it  presumes  the  lowest  possible 
amount;  that  is,  nominal  damages. 

32.  Whenever  damages  must  be  proved  to  show  the  vio- 

lation of  a  legal  right,  proof  of  nominal  damage 
•will  not  support  an  action.  The  law  applies  the 
maxim,  "De  minimis  non  curat  lex." 

In  eases  where  damap:es  are  the  gist  of  the  actiitn.  jiroof  (»f  daniape 
is  essential  to  the  proof  of  a  lej,Ml  wron;;.  In  this  class  of  ca.'*es.  the 
law  awards  the  amount  of  damaj;es  that  have  l)een  proved.  IJui 
there  is  another  class  of  eases,  in  which  damajjes  are  nr»t  the  pint, 
and  need  not  be  jiroved,  because  they  are  presnme<l  l>y  law.  Tlii.«« 
occurs  whenever  the  conduct  comjilained  of  is  absolutely  forbidden. 
In  this  class  of  cases  a  wron*,^  can  be  shown  without  |»roof  of  dama^:e. 
If  no  damages  in  fact  are  or  can  be  proved,  the  le;:al  presumption 
nevertheless  remains.^ "^ 

187  Armfield  v.  Nash.  31  Miss.  301;  Parker  v.  Meadows.  S»;  Teiin.  IM.  <;  S. 
W.  49. 

i»s  Barnes  v.  Brown.  130  X.  Y.  372.  29  N.  K.  7W;    Dayton  v.  Parko.  142 
Y.  403,  37  N.  E.  G42;   Webb  v.  Manufacturing  Co..  3  Sumn.  ISO.  Ft>«l.  Ca».  N 
17,322;   New  Jersey  School  &  Church  Furniture  Co.  v.  Board  of  Education 
Somerville,  58  N.  .1.  Law.  (i-ic.  3.".  Atl.  ."{OS;    Noble  v.  Hand.  1»*.3  Mass.  2s9.  .;;.. 
N.  E.  1020;    LaMin  v.  Willard.  10  Pick.  (Mass.)  04.     See.  also.  Whittemoro  v. 
Cutter.  1  Gall.  429,  433.  Fed.  Cas.  No.  17.e,mi;    I»avis  v.  Kendall.  2  K.  I.  '><M^. 
Cf.  Paul  V.  Sla.son.  22  Vt.  231;    Mechem.  Cas.  Dam.  8;   Aslil>y  v.  Wbite.  1  Ld. 
Raym.  938,  9")S;   Pig.  Torts,  10;   Suth.  Dam.  IS. 


3(i  DAMACiKS. 

A  liiiaiinn  owner  may  rt'rovcr  iioiuiiial  daiiiaucs  for  a  liaic  iiifiiiigo- 
iiifiit  of  his  rights.'"'* 

N(miinal  <lamaii('s  may  be  recoverod  for  llic  nnlawfiil  llo\va<,M'  of 
lands.-""  or  for  falso  imitrisonmcnt.'-"^ 

In  Enjiland  it  is  licld  thai,  in  an  adion  against  a  iinl)lic  olVucr  for 
nrulcci  of  dniy.  llir  jtlaintilT  mnsl  sliow  damage.-"-  In  America  it  is 
jri-n, Tally  held  I  hat  the  otlieer  is  liable  without  proof  of  damafje.-"^ 

Xoiitnldl  Ddi'KKJi.^  Kxftlhlixli   Ttujldx. 

The  ])rin(iital  purpose  of  allowing  nominal  damages  is  the  establish- 
ment of  rights.-*'* 

The  imi)ortan(e  of  the  right  to  recover  nominal  damages  often  con- 
sists in  its  eti'ect  ou  costs.-"" 

PENAL  BONDS. 

33.  In  an  action  on  a  penal  bond,  the  measure  of  dama- 
ges is  compensation  for  the  actual  loss,  not  exceed- 
ing the  penalty  named. 

Questions  involving  a  consideration  of  licpiidated  damages  and  ])en- 
altifs  foimcily  arose  chieliy  in  connection  with  that  peculiar  form  of 
obligation  known  as  a  "coiunion-law  bond."  -"" 

Chancery  assumed  juiisdiction  to  relieve  against  the  iM'ually  in  all 
cases  of  default,  from  whatever  eause.  on  the  jiaynient  of  just  com]>en- 

i('0X,.\v  Vnik  Kul.l.cr  Co.  V.  Itdtlicry,  i:::.'  N.  V.  •l'X\.  :!l»  X.  K.  S41;  ni>riclit 
V.  \\':it<T  Co..  SC,  Ala.  r).S7.  C,  South.  TS. 

-""  CliiiiMiian  V.  Copi'laiid.  .'..'>  .Miss.  -ITC,;  Ccnisli  v.  Mauulacluiing  Co.,  30 
X.  II.  47H;   .Amoskcag  Mff?.  Co.  v.  Goodalc   IC  X.  II.  53. 

-'»>  Ix-yo  V.  Vau  Valk<'iiltnrjrli.  r>  Hill  (X.  Y.)  'IVl. 

■■i"'^  Wriixl,  Mayne.  I>aiii.  11:    Wylir  v.  Itirdi.  4  Q.  H.  ^cn. 

-"■■  I.jilliii  V.  Willanl.  IC,  I'i<lc.  (.Mmss.i  C^^l;  .Micklcs  v.  ilarl.  1  Dciiio  (X.  Y.) 
.-4s:    I'niiicis  V.  S.iioi-llkopf.  .".:•.  X.  Y.  1.VJ. 

-"*  Wclili  V.  .\Iamifa<-turiiiK  Co..  :*.  Siimii.  1S'.>.  I^'cd.  Cms.  Xo.  17,311:;  llalliorno 
V.  Stiiison.  12  Me.  IS."'..  See,  also,  ScidfiisparKer  v.  Spear,  17  Me.  123;  Cliap- 
iiiaii  V.  .MaiuifaclmiiiK  Co..  K!  Conn.  2C,;»;  Devciidorf  v.  \Vert,  42  Harli.  (X.  Y.) 
227;  Thomas  v.  Brackney.  17  Harl).  (N.  Y.)  <;r>4;  Carhart  v.  (JaslJKiit  Co.,  22 
Marl).  (X.  Y.)  297;   Tunl)ridKe  Wells  Dipper's  Case,  2  Wlls.  414. 

■i"-.  Potter  V.  .Melleii,  I'X,  .Miuu.  122,  30  N.  \V.  43«;  Ely  V.  Parsons,  55  Couu. 
83,  10  .\tl.  AU\). 

2"«  See  3  HI.  Coinui.  434. 


LICillDATKI)    I)AM.\<;i:s    AM)    I'KNAITIKH.  o  < 

satioii.     This  iitaclirr  \\;is  nlliinatclv  fullnw  cd   liv  coiiitM  of  \:i\\ ,  ami 
was  filially  sjincliom d  Wy  slatiilc.-'" 

LIQUIDATED  DAMAGES  AND  PENALTIES. 

34.  Liquidated  damages  are  damages  agreed  upon  by  the 

parties  as  and  for  compensation  for,  and  in  lieu  of, 
the  actual  damages  arising  from  a  breach  of  con- 
tract. * 

35.  A  penalty  is  a  sum  agreed  to  be  paid  or  forfeited  ab- 

solutely upon  nonperformance  of  the  contract,  re- 
gardless of  the  actual  damages  suffered,  and  intend- 
ed rather  to  secure  performance  than  as  compen- 
sation for  a  breach. 

36.  "Where  the  parties  to  a  contract  agree  upon  liquidated 

damages,  the  sum  fixed  is  the  measure  of  damages 
for  a  breach,  whether  it  exceeds  or  falls  short  of 
the  actual  damages;  but,  where  the  sum  fixed  is  a 
penalty,  the  actual  damages  suffered,  whether  more 
or  less,  may  be  recovered. 

Intent  of  the  Partief<. 

In  makinj;  contracts,  the  parties  aro  at  iM-rfrct  lil»»  rty  to  stipulate 
for  li(]uidated  damages  to  be  paid  by  one  ]iariy  td  tii.-  other  as  com- 
pensation for  a  breach.-"^ 

To  have  this  effect,  it  is,  of  course,  piiiii;irily  rs>.iiii;il  that  the  jur 
ties  so  intended.'-'^''' 

207  Betts  V.  Burch.  4  Hurl.  &  N.  506.     See  2  Wliite  &  T.  Lend.  Ois.  Va\.  V*'^ 
*  Dwinel  v.  Brown.  54  Me.  4(i8.  474.  per  Appleti.u.  C.  .!..  (llsseuHnjf. 

208  In  an  action  to  recover  a  sum  stipulated  in  a  contract  as  lii|uidnt«>«l  dam- 
ages, no  proof  of  actual  damages  is  reiiuired.  Sanford  v.  Hank.  5M  Inwa.  (80. 
63  N.  W.  459.  Contract  of  employment;  damages  for  discharge  .stipulated  at 
two  weel^s'  wages.     "Watson  v.  IJussell.  140  N.  Y.  .S88.  44  X.  E.  U»l. 

^00  Koiup  V.  Ice  Co..  69  X.  Y.  4.'»:    Crisdee  v.  Boltou.  3  Car.  &  P.  240.     s 
also.  Dwinel  v.  Brown,  54  Me.  468:    Xoyes  v.  rhillips.  tVi  X.  Y.  4«»Si;    nenieiii 
V.  Cash.  21  X.  Y.  253:   Lampmau  v.  Codunu.  16  X.  Y.  275;   Coudou  v.  K«miiikt. 
47  Kan.  126,  27  Bac.  829. 


oS  DAMAGES. 


SAME— RULES  OF  CONSTRUCTION. 

37.  In  seeking  to  ascertain  the  real  intent,  the  courts 
lean  strongly  to"wards  a  construction  that  the  sum 
fixed  is  a  penalty,  rather  than  liquidated  damages. 
The  language  of  the  parties  is  not  conclusive,  and 
■will  be  strictly  construed.-'" 

There  are  four  forms  of  contracts  in  which  the  question  under  dis- 
cussion is  usually  presented : 

First.  The  contract  may  be  to  do  or  refrain  from  doing  a  particular 
thing,  or,  in  the  alternative,  to  pay  a  stipulated  sum  of  money.  Prima 
facie,  it  is  an  alternative  contract,  but  may  be  a  mere  cloak  to  cover  a 
penalty.- ^^ 

Second.  The  contract  may  be  in  the  form  of  a  common-law  bond. 
Prima  facie,  the  sum  stipulated  in  a  bond  is  a  penalty;  but,  neverthe- 
less, it  has  sometimes  been  held  to  be  liquidated  damages.^^* 

Tliird.  The  contract  may  bind  the  parties  to  do  or  refrain  from  doing 
a  ceiiain  thing,  and  provide  that,  in  case  of  default,  a  certain  sum 
shall  be  paid  as  a  penalty.  Prima  facie,  the  sum  named  in  this  class 
of  contracts  is  a  penalty;  but  the  presumption  is  not  so  strong  as  in 
the  case  of  bonds.- ^^ 

Fourth.  Till'  agrecuicnt  may  be  in  the  same  form  as  the  last,  except 
that  the  stipulated  sum  is  called  "liquidated  damages"  or  a  "forfei- 
ture." This  language  will  be  given  its  literal  effect  only  where  the 
sum  named  is,  in  fact,  reasonable  compensation  for  a  breach.^ ^* 

2ioDoane  v.  Kaihvay  Co.,  51  111.  Apj).  :^o3:  Condon  v.  Kcinpcr.  47  Kan. 
126,  27  Pac.  820;   Tode  v.  Gross,  127  N.  Y.  487,  28  N.  E.  MiW. 

211  Standard  Button  FastenniK  Co.  v.  Breed,  103  Mass.  10.  39  N.  E.  346.  See 
post,  "Alternative  Contracts." 

212  Studabakcr  v.  Wiiitc,  31  Ind.  212;  Fisk  v.  Fowler,  10  Cal.  512;  Duffy 
V.  Shoe-key,  11  Ind.  70;  Clark  v.  Barliard,  lOS  U.  S.  4:^(1.  4."):?,  2  Sup.  Ct.  878. 

213  Suth.  Dam.  §  2,S4.     Cf.  Law  v.  Local  Board  [18'.>2]  1  Q.  B.  130. 

21  <  Grand  Tower  Co.  v.  Phillips,  23  Wall.  471;  Hamilton  v.  Moore,  3:5  U.  C. 
Q.  B.  520. 


LIQUIDATKI)    DAMAdKS    AM)    PKN  A  I.'I  I KH, 


39 


38.  Where  the  stipulated  sum    is   wholly  collateral  to  the 

object  of  the  contract,  and  is  evidently  inserted  in 
terrorem  as  security  for  performance,  it  "will  be 
construed  to  be  a  penalty.  '' 

39.  Where   the   stipulated   sum   is  to  be  paid  on  the  non- 

payment of  a  less  amount,  or  on  failure  to  do  some- 
thing of  less  value,  it  will  generally  be  construed 
to  be  a  penalty.-"^ 

40.  Where  the  actual  damages  arising  from  a  breach  may 

be  either  greatly  more  or  greatly  less  than  the 
stipulated  sum,  according  to  the  time  of  the  breach, 
such  sum  will  usually  be  regarded  as  a  penalty. ■'• 

And,  generally,  wliere  a  contract  provides  for  payniont  in  install- 
ments, and  stipulates  that  a  certain  proportion  shall  Im-  r<*tainfd  fnmi 
each  installment,  the  whole  to  be  forfeited  upon  a  breach,  the  sum 
retained  is  considered  a  penalty."^ 

41.  Where  the  damages  resulting  from  a  breach  of  contract 

cannot  be  measured  by  any  definite  pecuniary 
standard,  as  by  market  value  or  the  like,  but  are 
wholly  uncertain,  the  law  favors  a  liquidation  of 
the  damages  by  the  parties  themselves ;  and,  where 
they  stipulate  for  a  reasonable  amount,  it  will  be 
enforced,  unless  glaringly  disproportionate.' 

210  Henry  v.  Davis,  123  Mass.  345;  Spear  v.  Smith.  1  lunio  (N.  Y.)  4i;i: 
Henderson  V.  Cansler.  Cj  X.  C.  542;  Brown  v.  Bellows.  4  Pick.  CNIass.l  179: 
Robeson  V.  Whitesides,  IG  Serg.  &  K.  (ra.)  320;  Burr  v.  Todd.  41  I'a.  St.  2iNi; 
Merrill  v.  Merrill,  15  Mass.  488;  Burrage  v.  Crump.  4.S  N.  C.  :^Vk 

210  Suth.  Dam.  §288;  Mayne,  Dam.  1G6;  Thompson  v.  Hudson.  L.  K.  4  H.  L. 
1,  L.  R.  2  Eq.  012;  Ashtown's  Lessoe  v.  Wliitf.  11  Ir.  Law  U.  4<i»>:  MrNItt  v. 
Clark.  7  Johns.  (N.  Y.)  405. 

217  Davis  V.  Freeman.  10  Mich.  ISS;    Richardson  v.  Woehler.  20  Mich.  0<>. 

218  Savannah  &  C.  R.  Co.  v.  Callahan,  50  Ga.  331.  But,  where  the  sum  was 
not  excessive,  it  has  been  allowed  as  liquidated  damages.  See  Elizabethtown 
&  P.  R.  Co.  V.  Geoghegan.  9  Bush    (Ky.)  50. 

210  Kelso  V.  lU'id,  145  Pa.  St.  000.  23  Atl.  323. 


•10 


nAM\f;Ks. 


Tims,  si  i|iiil;i(  ions  fdi  Ii(|ni<l;tt('il  (l;iiii;i^cs  linvc  limi  ii]ilii](l  in  ;ntii)ns 
for  hrciicli  tif  niiMii;i.<i»'  promise; --'"  liicacli  of  rondihl  for  ilio  smIc  of 
jjroporty  of  nnccrtain  valno;  --^  breach  of  ayivemcul  uul  lu  lai  rv  on 
busint'ss.--* 

42.  Where  damages  can  be  easily  and  precisely  deter- 
mined by  a  definite  pecuniary  standard,  as  by  proof 
of  market  values,  but  the  parties  have  stipulated 
for  a  much  larger  sum,  such  sum  will  usually  be 
held  to  be  a  penalty;  for  it  is  evident  that  the  prin- 
ciple of  compensation  has  been  disregarded.--' 

lint  tlic  parties  may  stipnlate  for  comitensation  for  losses  wliich  tin* 
law  wonld  re<rard  as  too  remote  or  niu-ertain  to  be  considered;  aud,  if 
the  stipulation  is  reasomible.  it  will  be  enforced  as  li<inidated  dam- 
ajxes.--* 

--"  Low(>  V.  Peers.  4  Burrows.  L*2*_'r). 

-21  (Jnininon  v.  Howe,  14  Me.  27,0.  In  New  York  if  is  held  that  tlic  (Inmasi's 
lor  )ire;ich  of  an  ordinary  contract  for  thi'  sale  or  exchange  of  lands  are  not 
uncertain,  aud  a  stipulation  for  li(inidated  daniajres  cannot  be  sustained  upon 
this  f.'ronnd.  Noyes  v.  Phillips.  (!0  X.  Y.  40S;  Richards  v.  Kdick,  17  Harb. 
'JtV);  Laurea  v.  Bernauer.  .3.3  Ilun.  :{l»7.  But  if  the  sum  tixed  is  reasonable  in 
nniouut,  and  clearly  luteuded'as  compensation,  it  is  recoverable  as  liipiidated 
damages.  Slosson  v.  Beadle,  7  Johns.  72:  llasltronck  v.  Tappen,  1.')  .Johns. 
200;  Knapp  v.  Maltby.  1.",  Wend.  .")S7;  otherwise  not.  Dennis  v.  Cumniins,  3 
•Johns,  ("as.  21>7. 

22-' .Ta(juith  V.  Hudson,  .">  Mich.  12.3;  Tode  v.  Gross,  127  N.  Y.  480,  28  N.  I']. 
4(^0.  Delay  In  the  perfornnxnce  of  contracts.  Fletcher  v.  Dyche.  2  Term  U. 
.32;  Curtis  v.  Brewer,  17  I'ick.  (.M.i-^s.i  .-.1.3;  liridges  v.  IlvMtt.  _'  Abb.  I'lac.  (.\. 
Y.)  44J);  O'Dr.nnell  v.  Jtosenberg,  14  Abb.  I'rac.  \.  S.  (\.  Y.»  .")!»;  I'aniliam  v. 
l{o.sH.  2  Hall  (N.  Y.)  1<;7;  Weeks  v.  Utile.  17  .\.  Y.  Super.  Ct.  1;  .Monmouth 
Park  Ass'n  v.  ^^■allis  Iron  ^\■orks.  7,:,  S.  J.  L.iw,  i;'.2.  Ji;  All.  1  in.  Ct.  W'ilcus  v. 
Klin-K',  ^7  III.  107;    \Yard  v.  BnildiuK  Co.,  12.'.  N.  Y.  2.!(i.  2:!:..  20  .\.  l',.  2r)(;. 

-■-••S;ilh.  D.ain.  »  2.s;t;  Fisher  v.  liidwell,  27  Conn.  .3<;3;  Stc\v:nt  v.  <;rier.  7 
IIoUKl.  .378.  .32  Atl.  :{2S. 

2-'i.Ia(|ua  V.  Headinj,'ton,  111  Iml.  :;(i!>,  IC.  .\.  i;.  .".JT:  Maiiicc  v.  I'.iady,  l."> 
Abb.  I'lac.  (N.  Y.)  173:  Colhcal  v.  'I'.Mlrii.igc.  li  .\.  Y.  ."..".1;  KnaiM'  v.  .Maltb.v.  13 
^Velld.  (.\.  Y.)  Wl;  Powell  v.  Buirini-hs,  7y\  Pa.  .^t.  :',2!».  But  if  I  lie  sum  tixed 
varies  materially  from  a  .iiist  coniiM-nsation,  or  if  the  intention  is  doubtful,  the 
Hum  will  be  In-hl  a  iM-nalty.  Dennis  v.  Cummins,  .3  .bdiiis.  Cas.  (N.  Y.)  2'.t7: 
K.smond  v.  Yan  Beiisilioten,  12  Barb.  (N.  Y.)  'AW.  \  provision  in  a  lease  for 
?5,000  damages,  to  cover  iuterniption  of  earnings  and  other  losses  iu  addition 


LlQl'lDATKl)     IiAMA<.KS    AND    I•^:NAI.TI^y^ 


w 


43.  Where  a  sum  is  deposited,  and   the    contract    declares 

that  it  shall  be  forfeited  for  nonperformance,  if 
reasonable  in  amount,  it  will  be  enforced  as  liqui- 
dated damages.  - 

44.  Where  the  stipulated  sum  is  to  be  paid  on  any  breach 

of  a  contract  containing  several  stipulations  of 
widely  different  degrees  of  importance,  it  is  usually 
held  to  be  a  penalty.-'" 

45.  A  sum  stipulated  to  be  paid  upon  a  breach  of  contract 

cannot  be  recovered  as  liquidated  damages  for  a 
partial  breach,  for  one  sum  cannot  consistently  be 
compensation  alike  for  either  a  total  or  a  partial 
breach;--'  and,  if  it  appears  from  the  language  used 
that  the  stipulation  was  meant  to  be  applicable  only 
to  a  total  breach,  it  will  be  disregarded  in  an  action 
for  a  partial  breach.-^ 

So.  also,  a  i)arlial  brcadi  may  jiistifv  tlif  oIIkm-  jiarty  in  trt-atiii^'  lh.- 
contract  as  at  an  end.  So,  the  sum  named  may  Im-  nrnvcu-d:  but.  if 
he  accepts  part  performance,  it  cannot.=^=*® 

to  unpaiil  reut.  in  case  of  breacli  by  the  lessee,  when,  on  an  actual  breach,  no 
substantial  damase  has  been  suffered,  must  be  held  to  he  a  penalty,  flay  Mfjc. 
Co.  V.  Camp,  25  U.  S.  App.  134,  V.i  C.  C.  A.  VM.  and  C.'.  Ked.  704. 

22r.  luilly  V.  Jones.  1  Bins.  .''.(Hi:  Hinton  v.  Sparkes.  L.  U.  3  C.  V.  Id;  Swift 
V.  Powell,  44  Ga.  123;  Terzell  v.  Shook,  Z^  N.  Y.  Super.  Ct.  (N.  Y.t  .".ol:  WaIU» 
V.  Smith,  21  Ch.  Div.  24:?;  Chaiide  v.  Shepnrd.  122  N.  Y.  :«»T.  2.'.  N.  K.  '•^'>x. 
See  In  re  Dagenham  (Thames)  Dock  Co.,  8  Ch.  App.  loi:-J. 

226  Watts  V.  Camors,  ll.-j  U.  S.  3r,o.  (i  Sup.  Ct.  ttl;  Wilh.-lm  v.  Kav,  s.  -Jl  ur. 
194,  27  Pac.  10.13;  Bignall  v.  Gould.  11t»  V.  S.  VX,.  7  Sup.  Ct.  ."M;  Lyman  v. 
Babcock,  40  Wis.  503,  517;  Kemhle  v.  Farr.-n.  •;  Hinp.  141:  KiK-k  v.  Bh'l»er. 
148  Pa.  St.  045.  24  Atl.  170;  Hathaway  v.  Lynn.  75  Wis.  ISi;.  43  N.  W.  «j«l: 
Trustees  of  First  Orthodo.K  Congregational  Chun-h  v.  Walrath.  27  Mich.  232; 
Trower  v.  Elder,  77  111.  453;  Clement  v.  Cash.  21  N.  Y.  2.53;  Nlver  v.  Uossman. 
18  Barb.  (N.  Y.)  .50;  Staples  v.  Parker.  41  Barb.  (N.  Y.i  c.-lii;  UinslnR  v.  Da.1.1. 
45  N.  J.  I-aw,  525;   Chase  v.  Allen.  13  (Jray  (Mass.)  42. 

227  Sedg.  Dam.  §  4.15. 

228  Cook  V.  Finch.  W  Minn.  4(i7  (<;il.  •'.51  n. 

220  Wibaux  V.  Live-stock  Co..  9  M.mt.  1.54.  1(..5.  22  Pnc.  492:  Ho.ngLin.l  v.- 
Se-ur  38  \  .3  Law.  230;  Lampmau  v.  Cochran.  10  N.  Y.  27.5.  i»er  Shankland. 
J  -^Inell  V.  McNitt,  9  Paige  (N.  Y'-)  l^'U    ^^""^Ij"  ^-  <^">^'-^'^-  ^^  ""•*•  ^-'''-  ^'* 


1-  DAMAOKS. 

46.  Where   the    sum    stipulated   to   be  paid  on  the  breach 

of  a  contract  would  constitute  an  evasion  of  the 
usury  laws,  it  will  be  treated  as  a  penalty,-**^  if,  in- 
deed, it  is  not  absolutely  void.^' 

ALTERNATIVE  CONTRACTS. 

47.  The  measure  of  damages  for  the  breach  of  an  alterna- 

tive contract  is  compensation  for  the  least  benefi- 
cial alternative. 

An  alternative  contract  is  one  which  may  be  executed  by  doinj]: 
either  of  several  acts,  at  the  election  of  the  part}'  from  whom  perform- 
ance is  due.-^* 

'llw  contract  is  completely  jterforincd  when  any  one  of  the  alterna- 
tives is  jK'rformed.  and  so,  of  course,  no  (lucstion  of  damages  for  a 
breach  arises.  An  alternative  contract  is  not  a  contract  for  li(iuidated 
damages.^^^ 

To  constitute  an  alternative  contract,  there  must  have  been  an  in- 
tention to  really  give  the  party  an  option.  When  this  is  the  case, 
the  damages  for  a  breach  are  limited  to  compensation  for  the  least 
iMiieficial  alternative.'^*  \\li(  re.  however,  tlieie  is  an  absolute  en- 
gagement to  do  a  thing,  and,  if  not,  to  pay  a  sum  of  money,  the  damages 
for  not  doing  the  thing  aic  the  sum  of  money.'^"^  In  such  a  case  the 
jiarty  has  no  oiJtion,-^"  and  tlie  agreement  is  one  for  liquidated  dam- 

y,:\r,;  Town  of  Wlioatland  v.  Taylor.  L'l>  Hun  (N.  Y.)  70;  Chase  v.  Allen,  i;j 
Gray  (.Mass.)  42. 

-•:"•  Clark  V.  Kay,  2G  Ga.  4();i;  Kurtz  v.  Sponalik',  G  Kau.  305;  Davis  v.  Free- 
man, to  .Mich.  188;  State  v.  Taylor,  10  Ohio.  378;  Gray  v.  Crosby,  18  Johns. 
(N.  Y.)  21!t.  220.  But  see  Lawn-nee  v.  Cowlcs.  13  111.  .".77.  Withfu  the  Iwumls 
of  the  Ie>:al  nite  of  interest,  ii;u-ties  may  li(|ui(1ate  damages  for  nonpayment 
of  money  when  due.  IlackinlMM  ly  v.  Shaw,  It  Ind.  :!!t2;  Dagget  v.  I'ratt,  15 
.Mjiss.  177. 

-3»  'J'his  would  (h'jH'nd  on  llii-  l;in;ruaL'c  (jf  the  statute. 

2.1:  Snth.  I)am.  S  282. 

233  Smith  V.  Bergengren,  153  Mass.  2;'.(;,  2<j  N.  E.  GDO. 

23*  Sedg.  Dam.  §  421. 

23C  Deverlll  v.  Burnell,  L.  R.  8  C.  P.  475;  Stew.irt  v.  Bedoll,  79  Pa.  St.  3.30; 
frane  v.  Peer,  43  N.  .7.  K(i.  .').53.  4  Atl.  72,  colleeting  oases.  But  see  llahn  v. 
Society.  42  Md.  4.00. 

230  Kfjuity  may  enforce  pfi-formanee  or  enjoin  a  violation.     Ayres  v.  IVase, 


I'AKIIAL    l-KIU-OKMANCK.  \t 

ages.  ANlicif  tlic  coiitiiKl  is  to  (III  ;i  cfiljiiii  lliiiij:  MC  til  |i;iy  n  rorl-nii 
sum  of  money,  ho  li;is  usuiilly  li;iil  liis  ilcciiuii.  iiml  i.j^infiii  of  Iht* 
money  may  be  enforced. -^^ 

PARTIAL    PERFORMANCE— ENTIRE    AND    DIVISIBLE 

CONTRACTS. 

48.  A  contract  may  be  divisible, — that  is,  tlio  promise  may- 
be susceptible  of  more  or  less  complete  perform- 
ance; and  the  damage  sustained  by  an  incomplete 
performance  or  partial  breach  may  be  apportioned 
according  to  the  extent  of  the  failure.-' 

On  the  other  hand,  the  ])romisG  may  lie  inch  visible  or  entire;  ami 
if  it  is  so,  and  is  not  independent  of  the  jtroniise  of  the  other  jKirty.  its 
entire  performance  is,  as  a  rule,  a  condition  concurrent  or  prece<lent  to 
the  liability  of  the  other  party  to  perform.^^" 

12  Wend.  (N.  Y.)  303;  Thcnix  Ins.  Co.  v.  Continental  Ins.  Co.,  14  .\M>.  Trnr.  ^N. 
S.)  20G;  Long  v.  Bowiing,  33  Boav.  58.1;  Gray  v.  Crosby.  IS  .Johns.  rN.  Y.»  210: 
Chilliner  y.  Chilliner,  2  Ves.  Sr.  528;  Ingeledew  v.  Crlpps.  2  Ld.  Knym.  M»: 
Lampman  y.  Cochran.  IG  N.  Y.  275;  AVard  v.  .Tewett.  4  Rob.  (N.  Y.)  714;  I{.»Im'- 
son  y.  Whitesides,  10  Sorg.  &  R.  (Pa.)  320;  National  Provincial  Bank  v.  .Mar- 
shall, 40  Ch.  Div.  112. 

237  Pearson  y.  Williams'  Adm'rs,  24  Wend.  )N.  Y.)  214.  2f,  \V»-n«l.  (X.  Y.) 
630;  Hodges  y.  King,  7  Mete.  (Mass.)  583;  Slosson  y.  Beadle.  7  Johns.  (X.  Y.) 
72.  See,  also.  Morrell  v.  Insnrance  Co..  33  N.  Y.  42C(.  This  nile  is  dlfflcult  to 
reconcile  with  that  of  the  least  beneticial  alternative.  Its  practical  effect  is 
to  make  an  alternative  contract  one  for  liipiidated  damages,  with  this  dif- 
ference: that  specific  performance  of  a  contract  can  be  enforced,  though  It 
stipulate  for  liquidated  damages,  while,  in  alternative  contracts,  only  the  al- 
ternative chosen  can  be  enforced.  See  Crane  v.  Peer.  43  N.  J.  Kq.  .V»3.  .Ws.  4 
Atl.  72,  and  Suth.  Dam.  §  282.  In  Smith  v.  Bergengn-n.  \r<i  Mass.  2:t<;.  2t\  N. 
E.  G90,  it  was  held  that  a  covenant  not  to  practice  medicine  in  a  certain  town 
so  long  as  the  plaintiff  should  remain  In  practice  there,  but  containing  a  pn>- 
vision  that  defendant  might  resume  practice  provided  he  would  pay  plaintiff 
a  certain  sum,  did  not  provide  for  eitlier  a  penalty  or  liquidated  dau)ag(>s. 
The  sum  named  was  a  price  fixed  for  what  the  contract  permitti-d  him  to  do 
if  he  paid. 

238  Ritchie  V.  Atkinson,  10  East.  29.":  Simpson  v.  Crippin.  L.  R.  8  Q.  B.  14: 
Honck  V.  :Muller,  7  Q.  B.  Div.  92;  Hoare  v.  Rennie.  5  Hurl.  &  N.  19;  Norrls  v. 
Harris,  15  Cal.  22G;  McGrath  v.  Cannon.  5.".  Minn.  457,  57  N.  W.  l.">0;  Fullmer 
v.  Poust,  155  Pa.  St.  275.  20  Atl.  .543;   note  134.  infra. 

239  Hartupee  y.  Crawford,  5G  Fed.  61;  Simpson  v.  Crippin.  L.  R.  8  Q.  B.  14. 


tt  l)AMA(iKS. 

Il;i\  iiii;  (iiicc  (IcIciiiiiiKMl  tli;ii  a  iirdiiiisc  is  (li\  isililc,  it  is  :i  (■(jmpnia- 
li\("ly  siiii|ti»'  inallcr  in  :i]>iilv  llir  law  ;  Iml  llic  (iiicsliiui  of  (li\isiliilily 
is  (iitliciill.  ami  ihis  (lilliciilty  has  nsultcd  in  a  diivct  c oiillid  in  liic  di-- 
<isi(ms.      Tile  (picsiion  is  one  of  consli-nction. 

i;.\ain|ilts  of  (li\  isihlc  contiacts  are  foniui  in  cliarU'r  parties  1o  load 
and  drli\('i'  a  coniplctc  caijid.  and  in  contraris  tor  tlio  sale  of  ^oods  in 
w  hicli  dclivcrv  ami  acccpianco  aic  to  tal^c  plate  hy  installments  (^xtcnl- 
ini,^  over  a  considcialilc  jM'rittd  of  tinu'.  In  these  contracts  it  has  been 
laiil  down,  as  a  general  rnlc.  that  a  bi-each  which  only  deprives  the 
«»iher  i)arty  of  a  part  of  that  to  "which  he  was  entitled  does  not  discharge 
him  from  such  performance  as  nmy  be  due  from  him.-^'^ 

The  courts  are  agreed  that  if  a  default  in  one  item  of  a  continuous 
contract  of  this  nature  is  accompanied  with  an  announcement  of  inten- 
tion not  to  iH'rform  the  contract  upon  the  agreed  terms,  or,  what 
auKtuuts  to  the  same  thing,  if  the  failure  to  fully  perform  is  deliberate 
and  intentional,  and  not  the  result  of  inadvertence  or  inability  to  i)er- 
foiiii.  I  lie  rule  we  ha\-e  been  discussing  does  not  ai)i)ly.  The  other 
]»arty,  under  these  ciicumst.uices,  may  treat  the  contract  as  being  at 
an  end.-*^ 

So.  also,  the  general  rule  a]»plicable  to  divisible  contracts  may  be 
•  dill ravened  by  express  stipulation.      It  is  always  permissible  for  the 

And  sec  Blackl)urn  v.  Roilly.  47  X.  J.  Law.  li!)0.  1  Atl.  '27;  Wootcn  v.  Walters, 
llo  N.  C.  2r.l,  14  S.  E.  7;!4.  7:{(;. 

-■»«  Ritchie  v.  Atltinsmi.  lo  I^nst.  2!t.'>:  Simpson  v.  ("i-ipiiin.  I..  It.  8  Q.  15.  14: 
-Mersey  Steel  Co.  v.  Xaylor,  U  Q.  V,.  I>iv.  (;4,s.  «>  App.  Cas.  434;  ('alien  v.  Plait. 
"•.;»  N.  Y.  :}48;  Trotter  v.  Ilecksclicr,  lo  X.  J.  E<i.  (512,  4  Atl.  .S:{:  (Jcili  v.  Mann- 
facturinu  Co..  57  N.  J.  Law,  4:M.  :'.I  Atl.  401;  Bulhnan  v.  Burt,  f.l  Md.  Iir>. 

IHrt'cily  oiipr)se(l  to  Situpsou  v.  Ciippin.  snpra,  is  another  case,  decided  I'ar- 
liiT.  Iloare  V.  Rennie,  5  Hurl.  I'v:  .\.  lit.  Sec.  also,  Norrington  v.  Wright,  ll.") 
f.  S.  ISS.  (;  Snp.  Ct.  12;  Barrie  v.  Karlc  14:5  .Mass.  1,  S  X.  K.  (iMO;  Kinir  riiillip 
.Mills  V.  Slater,  12  R.  I.  S2;  Catlin  v.  Tobias.  2(;  N.  Y.  217;  Hill  v.  Blake.  !>7 
.\.  V.  -Mc,;    ]'„]„"  V.  Torlei-,  Krj  .\.  V.  ;'.(;(;,  7  \.  L.  ;{04;    I'.iadli  y  v.   King,  44  HI. 

.■;.!'.•. 

-■"  WillieiK  V.  Reynolds.  'J  liani.  A:  Adol.  ,SS2;  Callin  v.  Toliias.  2C,  N.  V.  •_M7; 
Stephenson  v.  <'ady,  117  .Mass.  i\;  lilackburn  v.  Reilly,  47  X.  .1.  Law.  2;io.  1  .\tl. 
27;  <;erli  v.  Mannfactnring  Co..  .".7  .\.  .1.  Law.  4:U.  :U  Atl.  401;  Rugg  v.  Moore. 
I  111  I'a.  SI.  2:tC,.  1  Atl.  .•;20;  Wliarton  v.  Wiiieli.  1  10  .\.  Y.  2S7,  .T)  N.  E.  58J>.  So, 
alsii.  it  noniiaynient  of  one  installment  o\'  goods  he  acconipaiued  hy  smli  cir 
cninsfances  .-is  to  give  the  seller  reasonahle  grounds  foi-  Ihiidcing  Hint  the 
hnyer  will  not  he  ahle  to  pay  for  the  rest,  he  may  take  adv.inla.uc  of  ihis  one 
ouii--i'.ii  to  repudiate  the  contract.    Bloomer  v.  Bernstein,  L.  R.  \)  C.  i\  r)SS. 


TIMK    TO    WIIKIl    t  OMI'KNSA  TION    MAY    ItK    |{K<  oVKUKIi.  I  •'> 

JiillticS  to  il^^lCC   tllMl    the  cilliic   jicit'orilKllHc   (if  ;i    (-(i||si<i<T!lf  iotl,   in    i 

iijitiuc  (li\  isihlc.  sli;ill  he  a  coiulilioii   iiri-cfilciil    (o  the  i  i^;lil    to  a  fill 
lilliucnl  l),v  tlic  oilier  jiaitv  of  his  proiiiisf.       In  smli  a  rasf  uotliiu;;  ran 
be  obtained,  either  ujiou  tlie  coiiliacl  or  upon  a  <iiianiiini  niernii.  for 
what  lias  been  performed.      Ail  iiiii>i  lia\e  Imih  jmi  funned.-** 

ENTIRETY  OF  DEMAND. 

49.  All   the   damage  resulting   from  a  single  cause  of  ac- 

tion must  be  recovered  in  a  single  action.  The  de- 
mand cannot  be  split,  and  separate  actions  main- 
tained for  the  separate  items  of  damage. 

A  sinjil(^  cause  of  action  j^ives  rise  to  but  a  sin;:lc  licmand  for-  dam- 
aj;es.  l*laintiff  must  demand  the  full  aiiHuini  <tf  dania;.'es  to  whirli  he 
is  entitled  in  one  suit,  and  a  judgment  therein  is  a  bar  to  any  subw- 
(juent  suit  on  the  same  cause  of  action,  even  lhouj;h  los.ses  arise  subw- 
(juently.  width  could  not  have  been  foreseen  or  jiroved  at  the  time  of 
(he  former  suit.  AVhen  an  award  of  daiiia;;es  has  been  once  made  for 
a  wrono-,  that  wron*;  is  redressed.  Losses  subsetiueiitlv  arising;,  witli- 
out  a  renewal  or  continuance  of  the  conduct,  arc  damnum  alts^ue 
injuria.-*^ 

TIME  TO  WHICH    COMPENSATION    MAY    BE    RECOVERED- 
PAST  AND  FUTURE  LOSSES. 

50.  The  damages  recoverable  in  an  action  include  compen- 

sation, not  only  for  losses  already  sustained  at  the 
time   of  beginning    the    action,  but    also    for   losses 

242  Cutter  V.  Powell,  6  Term.  R.  320,  2  Smith,  I^ad.  Cas.  Eq.  1.  nml  notes; 
Leonard  v.  Dyer.  20  Coiui.  172;  :Martln  v.  Schoonbcrper.  S  Wntts  &  S.  (I'l  ■ 
367;   Hartley  v.  Decker,  S9  Pa.  St.  470. 

243  Wichita  &  W.  R.  Co.  v.  Bet-be.  :W  Kan.  4(;.->.  IS  Viu:  .-.o*_':  Hill  v.  .Toy.  14W 
Pa.  St.  243,  24  Atl.  293;  Howell  v.  Goodrich.  «!9  111.  .>")<>;  I'iern»  v.  Railway  Co., 
39  Minn.  451,  40  N.  W.  520;  Winslow  v.  Stokes,  48  N.  C.  285;  Fetter  v.  Real.  1 
Ld.  Rayui.  339.  «>92,  1  Salk.  11.  Compare,  for  illustrations  of  .separati-  causes 
of  action.  Secor  v.  Sturgis.  IG  N.  Y.  54S:   Nathaus  v.  Hoper.  77  N.  Y.  42o. 

As  to  contracts  for  sale  and  delivery  of  poods  in  inst.-illnicnts.  see  Nirlmls  v. 
Steel  Co.,  137  N.  Y.  471,  33  N.  E.  5G1;  Wharton  v.  Winch,  140  N.  Y.  2S7,  3.".  N. 
E.  589. 


4G  DAMAGES. 

■which  have  arisen  subsequently,  and  for  prospective 
losses,  if  such  losses  are  the  certain  and  proximate 
results  of  the  cause  of  action,  and  do  not  themselves 
constitute  a  new  cause  of  action. 

If,  pending  a  fixed  term  of  (Mni)loyniont,  the  employ<S  is  wrongfully 
discliaiged,  he  may  bring  his  action  for  damages  at  once,  without  wait- 
ing for  the  expiration  of  the  term,  and  in  some  states  may  recover  dam- 
ages for  the  entire  damages  suffered,  based  upon  both  past  and  prospec- 
tive loss  of  wages,-**  while  in  others  he  can  only  recover  for  loss  of 
wages  ui>  to  the  time  of  the  trial. -^^ 

If,  at  the  time  of  the  discharge,  his  wages  are  then  paid  in  full,  only 
one  action  will  lie  to  recover  damages,  based  on  future  wages,  even 
though  they  were  by  the  contract  made  paj^able  in  installments.^*® 

Tlie  eniployd  discharged  dining  the  term  of  employment  may  either 
(1)  sue  during  the  term,  for  damages;  or  (2)  treat  the  contract  as 
rescinded,  and  sue  on  the  <]uantum  meruit  for  the  work  actually  i)er- 
formed;  or  (3)  wait  until  the  expiration  of  the  term,  and  claim  as  dam- 
ages the  wages  agreed  on,  less  what  he  has  or  could  have  earned  after 
his  discharge,  and  pending  the  term.^*^ 

"Damage  to  goods  and  injury  to  the  person,  although  they  have 
been  occasioned  by  one  and  liie  same  wrongful  act,  are  infringements 
of  different  rights,  and  give  rise  to  distinct  causes  of  action;  and  there- 
fore the  recovery,  in  an  action,  of  compensation  for  the  damage  to  the 
goods,  is  no  bar  to  an  action  subsequently  commenced  for  the  injury  to 
the  person."  -*^ 

-•'^  C'uttor  V.  CJilk'tte.  It;:;  Mass.  9."3,  :J0  N.  E.  1010;  Remelco  v.  Hall,  31  Vt. 
.>S2;   Sutherland  v.  Wyer.  G7  Me.  64;   King  v.  Steiren,  44  Pa.  St.  99. 

s*'.  IJassctt  V.  French,  10  Mise.  Rep.  07."),  ^M  N.  Y.  Supp.  007;  Zender  v.  Seli- 
ger-Toothill  Co.,  17  Misc.  Kep.  120,  39  N.  Y.  Supp.  340;  .lordau  v.  Patterson,  07 
•  Dim.  480,  35  Atl.  521;  Fowler  v.  Armour.  24  Ala.  194;  Litcheustein  v. 
I'.rooks,  75  Tex.  190,  12  S.  W.  975;  Gordon  v.  Brewster,  7  Wis.  355.  And  see 
the  dictum  in  Everson  v.  Powers.  89  N.  Y.  .527. 

2*"  .Fames  v.  Allen  Co.,  44  Ohio  St.  220.  (;  X.  E.  240.  Cf.  Mount  Hope  Ceme- 
tery Ass'n  V.  Weidenmann.  i:'.9  111.  (57.  2S  \.  E.  S.34. 

247  Colburn  v,  Woodworth,  31  Barl).  (N.  Y.)  381,  383. 

248  lirunsden  v,  Humphrey,  14  Q.  B.  Div.  141.  In  the  recent  case  of  Reilly 
V.  Paving  Co.,  31  App.  Div.  .302,  52  N.  Y.  Supp.  817.  the  contrary  rule  was 
adopted;  but,  as  pointed  out  in  28  Civ.  Pioe.  R.  ()3.  note,  the  English  rule  had 
previously  been  adopted  and  followed  in  the  case  of  Mulligan  v.  Ice  Co.,  re- 


TIMK    TO    WIIK  II    lOMPENSATION    MAY     ItK    UKCOVKKKD.  47 

Repetition  of  Wrou(/. 

Where  an  action  has  been  brought  for  ;i  wrong,  and  \\v  wrong  is 
subsequently  repeated,  a  new  action  must  In*  hronglit  to  rccuvrr  tin; 
damages  caused  thereby.  Sucli  repelitiun  coiistiliites  a  m-w  cause  of 
action,  and  compensation  for  tlie  loss  as  caused  by  one  wron;,'  cannot 
be  recovered  in  an  action  lu'ought  to  recover  the  damages  caused  l>y 
another  and  a  distinct  wrong.-*" 
Continuing  Torts  and  Breacliea  of  Contract. 

A  single  wrongful  act,  however,  may  be  of  sndi  a  nature  as  lo  give 
rise  to  a  continuous  succession  of  torts  or  breaches  of  contracts.  "In 
the  case  of  a  personal  injury,  the  act  complained  of  is  c»)niplete  and 
ended  before  the  date  of  the  writ.  It  is  the  damage  (uily  that  con- 
tinues and  is  recoverable,  because  it  is  traced  baik  to  the  act :  wliilc  in 
the  case  of  a  nuisance  it  is  the  a<'t  wliicli  continues,  or.  ratlni'.  i.-^  ix-- 
newed  day  by  day."  -^° 

A  continuing  tort  or  breach  of  contract  is,  in  <'tfect.  simply  tln'  repe- 
tition of  the  same  wrong  an  infinite  number  of  times.- '^ 

As  a  general  rule,  where  a  continuous  duty  is  imposed  by  contract, 
each  moment  its  performance  is  neglected  constitutes  a  separate  breach, 
for  which  an  action  will  lie.  This  has  been  held  in  actions  for  the 
breach  of  contracts  for  support;-"  contracts  not  to  engage  in  Imsi- 
ness;  -^^  and  contracts  to  convey  land.-''* 

Where  permanent  structures  liave  been  erected  which  result  in 
injury  to  land,  there  is  much  confusion  and  conllict  in  the  authcuitits 
as  to  whether  all  the  damages,  past  and  prosi)ective,  may  be  recovered 
in  a  single  suit,  or  whether  successive  actions  must  be  brought  to 

ported  in  the  note  referred  to,  which  was  attiniifd  un  ai'pcal  in  lo'.i  N.  Y.  ''..".T. 
16  N.  E.  GS4. 

249  In  an  action  for  slander,  evidence  of  words  sp.iktn  after  conuuenoeniont 
of  suit  are  inadmissible.  Root  v.  Ixjwudes.  c,  IIIU  iN.  Y.)  OlS;  Keeubolts  v. 
Becker,  3  Deuio  fX.  Y.)  34G. 

2  50  Kockland  Water  Co.  v.  Tillsou,  Ul)  Me.  235,  2(JS. 

2  51  Beach  v.  Grain,  2  N.  Y.  S(>. 

252  Fay  V.  Gujnon,  131  Mass.  31. 

2  53  Hunt  V.  Tibbetts,  70  Me.  221. 

254  Warner  v.  Bacon.  8  Gray  (ilass.'*  .307.  As  to  nuisances,  see,  also,  I>.h- 
ver  City  Irrigation  &  Water  Co.  v.  Middaugh,  12  Colo.  434.  21  Pac.  5C5:  Mark- 
ley  V.  Duncan,  1  Hai-p.  (S.  C.)  276;  Cobb  v.  Smith,  3S  Wis.  21;  Sta.ller  v. 
Grieben,  61  Wis.  500,  21  N.  W.  629.  See.  also,  Fearsou  v.  Carr.  "J7  N.  C.  IIM.  1 
S.  E.  916;  Dailey  v.  Canal  Co.,  24  N.  C.  222. 


4S  i>AMA(;i-:s. 

i-('('()vcr  (■(iiii]Mns;ili(Mi  for  llic  il;mi;i.i:('  ;is  ii  arises.  'Plic  licilci'  view 
is  thai,  if  the  slnutiiiv  is  oxprcssly  aiitliorizcd,  llicii'  is  no  liability 
f<ti-  tlio  damairc  lu'ccssarily  ivsiiliinu.  If  it  is  authorized  on  condi- 
tion that  ('oni|>ensation  be  made  for  ihe  resuiliiiu  damage  (a  condition 
commonly  inii)Osed  by  the  auihoiizinii'  act  or  the  conslitiitioni.  and  it 
is  iiennanent  in  its  nature,  its  continuance  may  reasonably  be  pre- 
sumed, and  full  compensation  for  both  past  and  prospective  losses  may 
be  recovered  in  one  action. -^^ 

Where  the  erection  of  the  structure  was  a  forbidden  act, — that  is, 
where  it  was  a  trespass,  and  the  act  of  trespass  is  com])leted  once  for 
all, — the  entire  damage,  past  and  prospective,  must  be  recovered  in 
one  suit.-'^" 

CARRIERS  OF  GOODS -DAMAGES  FOR  REFUSAL  TO 
TRANSPORT. 

51.  The   measure   of  damages   for   refusal   to   receive  and 

transport  goods  is  the  difference  bet-ween  the  value 
of  the  goods  at  the  time  and  place  of  refusal,  and 
what  would  have  been  their  value  at  the  time  and 
place  w^here  they  should  have  been  delivered,  w^ith 
an  allow^ance  for  w^hat  the  freight  charges  would 
have  been.-' 

52.  If  other   reasonable   mode  of  conveyance  can  be  pro- 

cured, the  measure  of  damages  is  the  increased  cost 
of  transportation.^ 

2s5Chica)xo  *:  K.  1.  K.  Co.  v.  Locb,  lis  111.  2iK\.  s  N.  E.  4G0;  .Teffersonvllle, 
M.  &  I.  K.  Co.  V.  Estcrlc.  Hi  Bush  iKy.t  CCT.  But  see  Uline  v.  Railroad 
Co..  101  N.  Y.  m,  4  N.  E.  5:i(j;  Stowcrs  v.  Cilbcit.  15(i  N.  Y.  (K)0,  'A  N.  E.  -JS^; 
I'niiil  V.  Railway  Co.,  112  N.  Y.  ISC.  1J»  N.  E.  4S7.  Cf.  Cadle  v.  Railroad  Co., 
W  Iowa.  11;  Aldwortli  v.  City  of  Lynn.  l.">:',  Mass.  ,-..'^,  2«  N.  E.  220;  City  of 
I'.iiCaiila  V.  Siiniiioiis.  SC  Ala.  r)l.">,  C.  South.  17;  Uccd  v.  Slate.  tOS  \.  Y.  407. 
1.".  N.  i-;.  7:5.1;  Duryca  v.  .Mayor,  etc.,  2(;  IIuii  (.\.  V.)  120.  See,  also,  City  of 
.North  VeriKUi  v.  VocKler.  Id.''.  Ind.  :U4,  2  \.  K.  S21. 

!!•''•'  See  Adams  v.  Railroad  Co.,  IS  Minn.  2(;o  ((Jil.  2.".()). 

-•"  I'eimsylvania  R.  Co.  v.  Titusvillc  &  V.  Plank  R.  Co..  71  Ta.  St.  :r)0; 
<;:ilrri;i  \-  C.  V.  R.  Co.  v.  n:\r.  IS  111.  4S.S;  Il.irvry  v.  Railroad  Co.,  124  Mass. 
421;  llridKinan  v.  The  Kiiiily.  IS  Iowa,  .".o'.t;  W  aid's  Cent.  A:  Pac.  Lake  Co. 
V.  Elkins.  ;'.4  .Mich.  l.'iO;  O'Conner  v.  I'"(irslei-.  lo  Watis  (Pa.)  41S;  Bracket  v. 
.McNair.  14  .Tohns.  (N.  Y.)  17o. 

20»>o'Coiiner  v.  Forster,  10  Watts  (Pa.j  418;    Ogden   v.  Marshall,  S  N.    Y. 


CAICICIKKS    Of    (iOOlJH.  4'.' 


SAME— DAMAGES  FOR  LOSS  OR  NONDELIVERY. 

53.  The  measure  of  damages  for  total  loss  or  nondelivery 

is  the  value  of  the  goods  at  the  time  and  place  they 
should  have  been  delivered.- ' 

Obviously,  the  natural  ami  luohahlc  conscMnicno'H  of  a  failnif  to 
doliver  tho  jioods  at  their  dcsliiiatioti  is  a  loss  lo  the  owner,  anioiiniin;: 
to  the  vahie  of  the  ^oods  at  dial  point,  and  smh  valnt-  is  ilit-refore  the 
measure  of  damages. 

SAME— DAMAGES  FOR  INJURY  IN  TRANSIT. 

54.  The  measure  of  damages  for  injury  to  goods  in  transit 

is  the  difference  between  the  value  of  the  goods  at 
the  time  and  place  of  delivery  in  their  damaged 
condition,  and  what  their  value  would  have  been 
had  they  been  delivered  in  good  order. "*" 

340;  Grnnd  v.  Foudeigast.  5S  Barb.  (N.  Y.)  -JKr.  IIi};trinsou  v.  W.-ld.  14  P.rny 
(Mass.)  1U5;  Crouch  v.  Railway  Co.,  11  Exch.  142.  See.  also.  Ni-lson  v. 
Elevating  Co.,  55  N.  Y.  480.  Cf.  Bohn  v.  Cleaver.  25  La.  Ann.  415».  Plain- 
tiff  cannot  recover  for  damages  caused  by  his  failure  to  properly  c-are  for  the 
goods  while  they  were  in  store,  awaiting  transportation,  and  before  they  had 
been  accepted  by  the  carrier.  Hamilton  v.  McPIkmsoii.  i'.s  N.  Y.  7li.  ()ni4 
with  whom  a  carrier  has  made  a  contract  for  transporting  his  prxMls  may.  in 
case  of  breach,  elect  to  sue  for  damages  for  failure  to  perform  the  public 
duties  of  a  carrier,  or  he  may  waive  the  tort,  and  sue  for  breach  of  the  siH-iinl 
contract.     Hutch.  Carr.  §§  737-74S:    Denman  v.  Railroad  Co.,  52  Neb.  140.  71 

N.  w.  mi. 

2  59  Rodocanachi  v.  ^lilburn.  IS  Q.  B.  I>i\.  07.  Cf.  .Mau'iiin  v.  IMnsmore.  .Vi 
N.  Y.  168,  62  N.  Y.  .35,  and  7o  X.  Y.  410.  See.  also.  Faulkner  v.  Hart.  S2  N. 
Y.  413;  Spring  v.  Haskell.  4  Allen  (.Mass.)  112;  Sturgess  v.  Bissell.  4<\  S.  Y. 
4()2.     But  see  The  Telegraph,  14  Wall.  258;    Krohu  v.  ( (eclis.  48  Barb.  (N.  Y.) 

127. 

260  Notara  v.  Henderson,  L.  R.  7  Q.  B.  225;  Chicago.  H.  \-  Q.  R.  Co.  v.  Hale. 
83  111.  3G0;  Brown  v.  Steamship  Co.,  147  Mass.  .58.  l«i  N.  K.  717;  Ix)ul8ville 
&  N.  R.  Co.  V.  Mason.  11  Lea  (Tenn.)  116;  Magdeburg  (;eiiiTal  Ins.  Co.  v. 
Paulson,  29  Fed.  530;  The  Mangalore.  23  Fed.  4(K{.  See  Morrison  v.  Steamship 
Ck).,  36  Fed.  569,  571;  The  Compta,  5  Sawy.  137.  Fed.  Cas.  No.  3.O70:  Bow- 
man V.  Teall.  23  Wend.  (N.  Y.)  .3(K):  Hackett  v.  Railroad  Co.,  35  .N.  H.  .'.ixt: 
Western  Mfg.  Co.  v.  The  Guiding  Star,  37  Fed.  641. 
CHAP.DAM.— 4 


50  DAMAGES. 

SAME— DAMAGES  FOR  DELAY. 

55.  The   measure   of  damages   for   delay  is  the  difference 

between  the  value  of  the  goods  at  the  time  and 
place  fixed  for  delivery,  and  their  value  at  the  time 
and  place  of  actual  delivery.-" 

56.  Where  the  value  of  the  goods  is  not  diminished  by  the 

delay,  the  measure  of  damages  is  the  value  of  their 
use  during  the  period  of  delay. ^^ 

SAME— CONSEQUENTIAL  DAMAGES. 

57.  Consequential  damages  arising  from  a  carrier's  default 

may  be  recovered  provided  they  are  natural  and 
probable  consequences  of  the  breach  of  duty.-*^ 


203 


DAMAGES  FOR  INJURIES  TO  PASSENGER. 

68.  "The  obligation  or  responsibilities  of  public  carriers 
do  not  arise  altogether  or  mainly  out  of  contracts; 
they  are  principally  imposed  by  law.  The  refusal 
to  undertake  the  conveyance  of  a  passenger  w^ithout 
excuse,  or  w^hen  actionable,  is  merely  a  violation 
of  a  carrier's  duty." 

261  Hudson  V.  Railway  Co.,  02  Iowa.  2.31.  60  N.  W.  608;  Wilson  v.  Railway 
Co.,  9  C.  B.  (N.  S.)  032;  Cutting  v.  Railroad  Co.,  13  Allen  (Mass.)  381;  The 
Caledonia,  157  U.  S.  124,  139,  15  Sup.  Ct.  537;  Weston  v.  Railway  Co.,  54  Me. 
376;  Sherman  v.  Railroad  Co.,  64  N.  Y.  254;  Ward  v.  Railroad  Co.,  47  N.  Y. 
29;  Scott  V.  Steamship  Co.,  106  Mass.  468. 

262  United  States  Exp.  Co.  v.  Haines.  67  111.  137.  Priestly  v.  Railroad  Co., 
26  111.  206. 

263  Vick-sbui-;,'  &  M.  R.  Co.  v.  Ragsdale,  Hi  Miss.  458;  Hadlcy  v.  Baxendale. 
9  Exoh.  341;  Gee  v.  Railway  Co.,  6  Hurl.  &  N.  211.  As  to  sufiiciency  of  no- 
tice of  special  circumstances,  see  Home  v.  Railway  Co.,  L.  R.  8  C.  P.  131,  af- 
lirming  L.  R.  7  C.  P.  583.  See,  also,  Cobb  v.  Railroad  Co.,  38  loAva,  601,  630; 
Harvey  v.  Railroad  Co.,  124  Mass.  421 ;  Pennsylvania  R.  Co.  v.  Titusville  & 
P.  Plank  R.  Co..  71  Pa.  St.  3.">0;  Hales  v.  Railway  Co.,  4  Best  &  S.  66;  Far- 
well  V.  Davis,  r>r,  Barb.  (N.  Y.)  73;  Matlier  v.  Exi)ress  Co..  138  Mass.  55; 
P.lack  V.  Baxeudale,  1  Exch.  410;   Favor  v.  Philbrick,  5  N.  H.  358. 


INJURIES    TO    PASSKNGKU.  51 

Contracts,  however,  are  usuallv  made  lixiii;;  ilir  (  xtciit  (»f  tln'  iiiiit<-. 
the  mode  of  conveyance,  the  kind  of  accdiminMliiiioiis.  tin*  lime,  cir.; 
and  therefore  actions  founded  u\h)U  sndi  contiarts  may  he  mainlaim-d. 
^^llether  the  action  be  upon  the  breach  of  duty  or  for  violation  of 
contract,  to  the  extent  that  they  involve  the  same  acts  and  omission^, 
the  damages  as  measured  by  law  are  substantially  the  same.-"* 

The  consequences  in  this  class  of  cases  fall  directly  njioii  tin-  pfrsfni. 
and  in  most  cases  are  not  distinguishable  from  tluisc  uf  a  t<iii.  In 
either  tort  or  contract  the  damages  are  measured  ]»y  tin-  iirnliahie  or 
natural  consequences  of  the  wrong,  but  the  natural  ami  jtroluble  eun- 
sequences  of  a  breach  of  contract  must  be  determined  with  regard  to 
all  the  facts  known  to  the  parties  at  the  time  the  contract  was  made.^'" 

SAME— EXEMPLARY  DAMAGES. 

59.  Where  the  action  is  upon  the  contract,  exemplary  dam- 

ages cannot  be  recovered;-"'^  but  where  the  action 
is  for  a  tort,  founded  on  a  breach  of  the  public  duty, 
exemplary  damages  may  be  given  in  proper  cases.  ^"^ 

SAME— PERSONAL  INJURY. 

60.  In   actions    for    personal    injury   to    a    passenger,    the 

measure  of  damages  is  usually  the  same  as  in  or- 
dinary cases  of  personal  injury.-'"^ 

2  6  4,3  Suth.  Dam.  i>34. 

265  Cf.  Hobbs  V.  Railway  Co..  10  Q.  P>.  Ill,  with  McMnlion  v.  Fi.-M.  7  Q. 
B.  Div.  591;  AVilliams  v.  Vanclerbilt.  28  N.  Y.  217;  Alabama  (J.  S.  K.  Co.  v. 
Heddleston,  82  Ala.  218,  3  South.  53;  Baltimore  C.  P.  K.v.  Co.  v.  Kemp.  01 
Md.  74,  619;  Murdock  v.  Railroad  Co.,  133  Mass.  ir,;  Cincinnati.  H.  &  I.  K. 
Co.  V.  Eaton,  M  Ind.  474;  2  Sedg.  Dam.  §  8G8;  Brown  v.  Railway  Co..  .",4  \\> 
342,  11  N.  W.  356.  911. 

266  New  Orleans,  J.  &  G.  N.  R.  Co.  v.  Ilnrsr.  3.:  Miss,  ci;..;    Hamlin  v.  Rail 

way  Co.,  1  Hurl.  &  N.  4.08,  411. 

207  Heirn  v.  McCaughan,  32  Miss.  17;   Thomp.  Carr.  p.  54c..  §  .';    hi    p.  :..::. 

§27. 

208  Sedg.  Dam.  §  860. 


52  DAMAGES. 


SAME— FAILURE  TO  CARRY  PASSENGER— DELAY. 

61.  Damages  for  failure  to  transport   a   passenger  include 

compensation  for  the  increase  of  cost  of  carriage  by 
another  conveyance,  the  loss  of  time,  and  other  or- 
dinary expenses  of  delay.^^^ 

SAME— FAILURE  TO  CARRY  TO  DESTINATION— WRONGFUL 

EJECTION. 

62.  Where  a  carrier  fails  to  carry  a  passenger  to  his  des- 

tination, and  sets  him  down  at  some  intermediate 
point,  compensation  may  be  recovered  for  all  the 
expenses  of  delay,-"''  including  loss  of  time,^^  and 
cost  of  a  reasonable  conveyance  to  his  destination.^^^ 

He  ma}'  also  recover  compensation  for  tlie  indignit}-  of  the  expulsion 
from  a  train,  and,  if  tliere  are  aggravating  circumstances,  be  may  re- 
cover exemplary  damages. ^'^^ 

Where,  by  the  fault  of  the  carrier's  agents,  and  without  the  passen- 
ger's fault,  the  ticket  of  the  passenger  is  not  such  a  one  as  he  should 
have  to  entitle  him  to  passage,  the  carrier  will  be  liable  in  damages 
for  expelling  him.^^^ 

269  Baltimore  &  O.  R.  Co.  v.  Carr,  71  Md.  135,  17  Atl.  1052;  Eddy  v.  Harris, 
78  Tex.  ()C)1,  15  S.  W.  107;  Porter  v.  The  New  England,  17  Mo.  290;  The 
Zenobia,  1  Abb.  Adm.  80,  Fed.  Cas.  No.  18,209;  Williams  v.  Vauderbilt,  28  N. 
Y.  217. 

-'70  Chicago  &  A.  R.  Co.  v.  Flagg,  43  111.  3G4;  Pennsylvania  R.  Co.  v.  Con- 
11(^11,  127  111.  419,  20  N.  E.  89;  carrying  beyond,  Trigg  v.  Railway  Co.,  74  Mo. 
147. 

271  Hamilton  v.  Railroad  Co.,  53  N.  Y.  25. 

272  Indianapolis,  B.  &  W.  Ry.  Co.  v.  Birney,  71  111.  391;  Pennsylvania  R.  Co. 
V.  Connell,  127  111.  419,  20  N.  E.  89;  Francis  v.  Transfer  Co.,  5  Mo.  App.  7; 
Hamilton  v.  Railroad  Co.,  53  N.  Y.  25.  Cf.  Miller  v.  King,  88  Hun,  181,  34  N. 
Y.  Supp.  425. 

■^-■■i  Ilauson  V.  Railway  Co.,  (52  Me.  84;  Yates  v.  Railroad  Co.,  67  N.  Y.  100. 
But  not  in  an  action  for  breach  of  the  contract  of  carriage.  Miller  v.  King,  88 
Hun,  181,  34  N.  Y.  Supp.  425. 

27  4  Lal^e  Erie  &  W.  R.  Co.  v.  Fix,  88  Ind.  381;  Murdock  v.  Railroad  Co.,  137 
Mass.  293;  Yorton  v.  Railway  Co.,  54  Wis.  234,  11  N.  W.  482;  Id.,  (>2  Wis.  31)7, 
21  N.  W.  51(>,  and  23  N.  W.  401;  Bradshaw  v.  Railroad  Co.,  135  Mass.  407. 


CONTRACTS  TO  SELL  REAL  PROPERTY.  .'/^ 

63.   BREACH  OF   CONTRACT  FOR  SALE  OF  GOODS. ''ft 
64.   BREACH  OF  WARRANTY.^^s 

CONTRACTS  TO  SELL  REAL  PROPERTY— BREACH  BY 

VENDOR. 

65.  The  proper  measure  of  damages  for  the  breach  by  a 
vendor  of  his  contract  to  sell  real  property  is  the 
difference  between  the  contract  price  and  the  market 
value  of  the  land  at  the  time  of  the  breach,  plus 
any  part  of  the  purchase  price  which  has  been  paid, 
w^ith  interest. 
EXCEPTION — In  some  states  the  vendee  can  recover, 
in  addition  to  purchase  money  advanced,  with  in- 
terest, only  nominal  damages  for  a  breach  of  the 
contract,  due  to  failure  of  the  vendor's  title,  pro- 
vided the  vendor  acted  in  good  faith.  In  Pennsyl- 
vania  the   good   faith  of  the  vendor  is  immaterial. 

The  Better  Rule. 

In  most  American  states  a  vendee  can  recover  substanticol  damages 
for  his  vendor's  breach  of  contract  to  convey  real  property;-"  that 
is,  the  vendee  is  given  the  benefit  of  his  bargain.  This  is  of  particular 
importance  when  the  property  has  risen  in  value  after  th('  contract 
of  sale  was  entered  into.-^** 

The  value  of  the  land  in  estimating  the  damages  is  takt-ii  at  the 
time  it  should  have  been  conveyed  under  the  contract.-^® 

27  5  See  Tiff.  Sales,  §§  12.5-128. 

27  6  See  Tiff.  Sales,  §§  131-133. 

277  Hopkins  v.  Lee,  6  Wheat.  109;  Plummer  v.  Rigdon,  78  111.  222;  Loomis 
V.  Wadhams,  8  Gray  (Mass.)  557;  Skaaraas  v.  Fiunegan,  31  Minn.  48,  16  N.  W. 
45();  Case  v.  Wolcott,  33  Ind.  5;  Robinson  v.  Hoard.  15  Me.  20<;;  Irwin  v. 
Askew,  74  Ga.  581;  Barbour  v.  Nichols,  3  R.  I.  187;  Russ  v.  Telfener,  ."7  Fed. 
973. 

27  8  Hopkins  v.  Lee,  6  Wheat.  109. 

279  Allen  V.  Atkinson,  21  Mich.  351;  Combs  v.  Scott.  76  Wis.  mi.  4.")  N.  W. 
532;  Plnmmer  v.  Rigdon,  78  111.  222;  Whiteside  v.  .Jennings.  19  Ala.  784.  For 
breach  of  a  contract  to  give  a  lease,  the  measure  of  damages  is  the  value  of 


54  DAMAGES. 

Nominal  Damages  Only — The  Engliah  Rule. 

In  England  an  anomalous  mle  of  damages  has  been  adopted  in  ac- 
tions against  vendors  for  bieacli  of  contracts  to  sell,  to  the  effect  that 
the  vendee  cannot  recover  for  the  loss  of  his  bargain,  whether  the 
vendor  has  been  guilty  of  fraud  or  not.  If  there  has  been  fraud, 
the  vendee  can  only  recover  nominal  damages  in  an  action  for  breach 
of  contract;  and,  to  recover  substantial  damages,  he  must  bring  an 
action  for  deceit.-^'* 

The  uncertainty  of  English  titles  is  assigned  as  the  reason  for  the 
rule,  but  such  considerations  have  no  place  under  our  registry  laws. 
The  English  rule  has  been  followed,  however,  in  some  states.  In 
Pennsylvania  this  is  carried  so  far  that  only  nominal  damages  are  re- 
coverable, even  in  cases  where  the  vendor  knew  that  his  title  was  not 
good.-^^ 

But  in  the  other  states  which  follow  the  English  rule  it  is  necessary 
that  the  vendor  act  in  good  faith,  or  he  is  held  liable  for  substantial 
damages.-*^ 

The  Xew  York  rule  is  that  "the  vendee  in  a  contract  for  the  sale 
of  land,  in  the  absence  of  fraud  or  bad  faith,  is  not  entitled  to  recover, 
aside  from  the  purchase  money  paid,  and  expenses  of  examination  of 
the  title,  other  than  nominal  damages  as  for  breach  on  the  part  of  the 
vendor  arising  from  his  inability  to  convey  a  good  or  marketable 
title."  =83 

the  lease;  that  is.  the  difference  between  the  value  of  the  premises  for  the  term 
and  the  rent  which  was  to  be  paid.  Loyd  v.  Capps  (Tex.  Civ.  App.)  29  S.  W. 
505;  Poposlvey  v.  Munkwitz,  68  Wis.  322,  32  N.  W.  35;  Trull  v.  Granger,  8  N. 
Y.  11.5.  Expenses  necessarily  caused  by  the  lessor's  breach  may  be  added. 
Yeager  v.  Weaver,  64.  Pa.  St.  425.  But  see,  for  expenses  not  recoverable,  Eddy 
v.  Coffin,  149  Mass.  463,  21  N.  E.  870. 

2 so  The  leading  cases  establishing  the  rule  in  that  country  are  Flurcau  v. 
Tliornhill,  2  W.  Bl.  1078,  and  Bain  v.  Fothfrgill,  L.  R.  7  H.  L.  158;  Robinson 
v.  Harman,  1  Exch.  850. 

2^1  Rurk  V.  Serrill,  80  Pa.  St.  413;  McCafferty  v.  Griswold,  99  Pa.  St.  276; 
McXiiii-  V.  Compton,  35  Pa.  St.  23;  Gerbert  v.  Trustees,  59  N.  J.  Law,  160,  35 
Atl.  1121.    Rut  see  Hennorshotz  x.  Gallagher.  124  Pa.  St.  1,  16  Atl.  518. 

2  82  Pumpelly  v.  Phelps,  40  N.  Y.  59;  Conger  v.  Weaver,  20  N.  Y.  140;  Mar- 
graf  V.  Muir.  57  N.  Y.  155;  Walton  v.  Meeks,  120  N.  Y.  79,  23  N.  E.  1115.  See 
Rineer  v.  Collins,  156  Pa.  St.  342,  27  Atl.  28;  Heimburg  v.  Ismay,  35  N.  Y. 
Super.  Ct.  35. 

-■s:!  Walton  V.  Meeks,  120  N.  Y.  79.  23  N.  E.  1115;  Northridge  v.  Moore,  118  N. 
Y.  419,  23  N.  E.  517.    See  Pumpelly  v,  Phelps,  40  N.  Y.  66. 


IJKKACH     OK    COVKNANTS. 


55 


Many  states  stato  the  rule  in  siidi  cMsrs  In  !.»•  tliaf.  if  iIh-  vf-mlor 
fails  to  convey  because  lie  has  not  a  ^^ooil  title,  lu-  is  always  liable 
to  the  vendee  in  substantial  damages  for  the  loss  of  the  barjiain.  TIuh 
rule  is  not  to  be  varied  because  the  vendor  a<ted  in  {,'ood  faith.'-"'* 

SAME— BREACH  BY  VENDEE. 

66.  The  measure  of  damages  for  the  breach  by  a  vendee 
of  his  contract  to  purchase  real  property  is  the  dif- 
ference between  the  contract  price  and  the  value 
of  the  land.^ 

In  some  cases  the  vendor  has  been  iiermitted  to  recover  the  contra,  t 
price;  "^'^  but  this  gives  him  more  than  compensation,  since  he  Htill 
has  the  land.  Where  the  vendee  has  been  in  jiossession.  interest  on 
the  whole  amount  of  purchase  money  unpaid  has  been  alloweil  as 
additional  damages.-" 

BREACH  OF  COVENANTS-SEISIN  AND  RIGHT  TO  CONVEY. 

67.  The  measure  of  damages  for  breach  of  a  covenant  of 
seisin  or  right  to  convey  is  the  purchase  price  paid, 
with  interest,  and  costs  of  the  ejectment  suit.  ' 

If  the  eviction  is  only  partial,  a  proportionate  aiiK.unt  (»f  the  consid 
eration  paid  is  recovered.-'''-' 

2S4  Doherty  v.  Dolan,  Go  Me.  87;  Ilartzell  v.  Crumb,  ^mi  M...  020.  .T  S.  W.  .VJ; 
Hopkins  v.  Lee,  6  Wheat.  109;  Plummer  v.  Rigdon,  78  HI.  222. 

2  85  ^iien  V.  Molm,  SO  Mich.  328,  49  N.  W.  u2;  Old  Colony  It.  Corp.  v.  Kvans. 
6  Gray  (Mass.)  2.3;  EUet  v.  Paxsou,  2  Watts  &  S.  (Pa.)  418;  Griswold  v.  Sa- 
bin,  51  N.  H.  167;  Porter  v.  Travis.  40  Ind.  55G;  Anderson  v.  Trultt,  r.{  Mo. 
App   590.     But  see  McGuinness  v.  Whalen,  Ki  R.  I.  558,  18  Atl.  158. 

286  Richards  V.  Edick,  17  Barb.  (N.  Y.)  200;  Goodpaster  v.  Porter.  11  I-wa. 
161;   Inhabitants  of  Alma  v.  Plummer,  4  Me.  2.58. 

287  Stevenson  v.  MaxAvell,  2  X.  Y.  408. 

288  Weber  v  Anderson,  73  111.  439;  Bingham  v.  Weiderwax.  1  X.  Y.  mi; 
Pitcher  V.  Livingston,  4  .Tohns.  (N.  Y.)  1;  Nichols  v.  Walter.  S  Mass.  243;  Bick- 
^ord  V.  Page,  2  Mass.  455;  Rickert  v.  Snyder,  9  Wend.  (N.  Y.)  416.  But  see 
Smith  Y.  Strong,  14  Pick.  (Mass.)  128,  a  case  where  the  consideration  paid 

could  not  be  proved.  v    v,  v^rt- 

289  Tone  V.  Wilson,  81  111.  529;    Guthrie  v.  Pugsley.  12  Johns.  i>.  \.)  l-b. 


56  DAMAGKS. 

If  ihoxv  has  been  uo  eviction,  only  nominal  damages  can  be  lecov- 
ered.-"''° 

SAME— WARRANTY  AND   QUIET  ENJOYMENT. 

68.  In  nearly  all  the  states  the  damages  -wrhich  are  given 
on  covenants  of  -warranty  and  quiet  enjoyment 
are  based  on  the  old  feudal  doctrine  of  -warranty, 
and  the  value  of  the  land  at  the  time  of  the  cove- 
nant is  made  the  measure.  But  the  value  of  the 
land  is  taken  at  the  price  -which  -was  paid  for  it. 
Though  this  may  be  contrary  to  all  the  fundamen- 
tal principles  of  damages,  it  is  certainly  the  rule  in 
the  great  majority  of  states.-"'^ 

According  to  some  authorities,  the  rule  is  that,  "if  the  eviction  has 
been  from  all  the  lands  conveyed,  the  recovery  has  been  limited  to 
the  purchase  price  i)aid  and  interest  for  the  time  of  dispossession ;  if 
from  a  definite  part  capable  of  definite  ascertainment  and  boundary, 
then  to  such  part  of  the  original  price  as  bears  the  same  ratio  to  the 
whole  consideration  that  the  value  of  the  land  to  which  the  title  has 
failed  bears  to  the  value  of  the  whole  premises'';  -^^  and  that,  "with- 
out the  aid  of  fraud  or  bad  faith,  nothing  can  be  recovered  for  im- 
provements made  or  for  the  increased  value  of  the  premises  produced 
by  them,"  -^^  though  the  value  of  such  improvements  is  deducted 
from  the  mesne  profits  which  are  recovered  by  the  real  owner.^"* 

Mollis  V.  I'heliis,  ."»  .Toliiis.  (X.  Y.)  49;  Cornell  v.  Jackson,  3  Cusli.  (Mtis.s.)  .jOU; 
ll.iitfonl  &  Salisl)iiry  Ore  Co.  v.  Miller,  41  Conn.  112. 

-'»o  Smith  V.  IIuslR's.  50  Wis.  G20,  7  N.  W.  053;  Cocla-ell  v.  Proctor,  O.')  Mo.  41. 

2»i  Staats  V.  Ten  Eyck's  Ex'rs.  3  Caines  (N.  Y.)  Ill:  Harding  v.  Larkiu.  41 
111.  413;  Devine  v.  Lewis,  38  Minn.  24,  35  N.  W.  711;  Brandt  v.  Foster,  5  Iowa, 
287.     But  see  Brooks  v.  Black.  08  Miss.  101.  8  South.  332. 

202  See  Hymes  v.  Esty,  133  N.  Y.  342,  347,  31  N.  E.  105. 

2i'-i  See  Walton  v.  Meeks,  120  X.  Y.  83,  23  N.  E.  1115;  Pitcher  v.  Livinsston. 
4  Johns.  (X.  Y.)  1;  Hunt  v.  Kaplee,  44  Hun  (X.  Y.)  141);  Ela  v.  Card.  2  X.  H. 
175;  Sedg.  Dam.  §  051;  Taylor  v.  Wallace,  20  Colo.  211.  37  Pac.  !)(i3;  Wflzfl  v. 
Kichcreck,  .53  Ohio  St.  02.  40  X.  E.  1007;  Copeland  v.  McAdory,  lOU  Ala.  .5.-.:;. 
.500,  13  Soutli.  .545;   Furnas  v.  Durgin,  119  Mass.  500. 

2W4  Green  v.  Biddle.  8  Wheat.  1;  Woodhull  v.  Rosenthal,  01  X.  Y.  390;  Hodg- 
kius  V.  Price,  141  Mass.  102,  5  X.  E.  502;   Stark  v.  Starr,  Fed.  Cas.  No.  13,307. 


HKKACH    OF   COVKNANTS.  •)  , 

EXCEPTION — In  a  few  states  the  measure  of  damages 
for  breach  of  these  covenants  is  the  value  of  the 
land  at  the  time  of  evic^^ion,-"'  including  inii)rove- 
ments.-^'^ 

SAME— AGAINST  INCUMBRANCES. 

69.  The    measure    of   damages  for   breach    of  a  covenant 
against  incumbrances  is : 

(a)  For  a  permanent  incumbrance,  the  diminution  in  the 

value  of  the  premises  due  to  the  incumbrance, — 
not  exceeding,  in  most  states,  the  consideration 
paid;  in  others,  not  exceeding  the  value  of  the 
land."'^ 

(b)  For  an  incumbrance  which   causes   a  total   eviction, 

the  consideration,  with  interest  and  costs,  in  most 
states;-'"  or  the  amount  necessarily  paid  to  avoid 
eviction,  not  exceeding  the  consideration; -"  or  the 
value  of  the  land,  with  interest  in  others;  "  and,  for 
a  partial  eviction,  a  proportionate  amount.*" 

Removable  Incwnhrances. 

Where  ineninbrances  exist,  such  as  mortjiajxes.  wliidi  can  Ix-  re- 
moved by  the  payiucnt  of  money,  the  grantee,  if  no  fi-aiid  intervenes. 

295  Norton  v.  Babcock,  2  Moto.  (Mass.)  rilO;  Hanly  v.  X.'lsou.  T,  M<'.  ■'-•"•: 
Keeler  v.  Woofl.  30  Yt.  242;   Sterling  v.  Peet,  14  Coun.  24.^). 

296Colemau  v.  Ballard's  Heirs,  13  La.  Ann.  512;    Bunny  v.  Iljpkins.in.  27 

Beav.  5(55. 

297  Bronson  v.  Coffin.  108  Mass.  175;  Harlow  v.  Thomas.  15  Ti.-k.  (Mass.l  CT,; 
Grant  v.  Tallman.  20  N.  Y.  191;  Mackey  v.  Harmon.  :?4  Minn.  ic^s.  i»4  N.  W. 
702;  Kellogg  v.  Malin,  62  Mo.  429;  Mitchell  v.  Stanley.  44  Conn.  .{12;  Clark 
V.  Ziegler.  79  Ala.  340;    Koestenbader  v.  Pierce,  41  Iowa.  2tV4. 

29sDimmick  v.  Lockwood.  10  ^Yend.  (N.  Y.)  142;  (irant  v.  Tallman.  2n  N. 
Y.  191;    Howell  v.  :^Ioores.  127  111.  c.7.  19  N.  E.  SC.-^;    Stewart  v.  I»rak.-.  9  N. 

J.  Law,  139. 

209  Dillahunty  v.  Kailway  Co..  .59  Ark.  r.2t).  27  S.  W.  I.H.2.  and  2S  S.  W.  iV.7. 

300  Barrett  v.  Porter,  14  Mass.  143;  Horsford  v.  \Viipht.  Kirby  (Conn.i  3: 
Rickert  V.  Snyder.  9  Wend.  (N.  Y.)  410;  Terry's  Kx'r  v.  Drabenstadt.  US  Pa. 
St.  400.     But  see  Harrington  v.  Mnrnhy.  100  Mass.  2'.i9. 

301  Harlow  v.  Thomas,  15  Pick.  (Mass.)  00;  Ale.xauder  v.  Bridgford,  59  Ark. 
195,  27  S.  W.  09. 


oa  DAMAGES, 

ami  no  nttcnipt  has  been  made  to  enforce  the  iiicuiubianco,  can  recover 
ndniinal  damages  only,  unless  he  shall  \\i\vv  paid  the  amount;  ^'^^  but 
this  must  not  ext-eod  the  prite  or  value  of  the  land,  as  the  <as(»  may 

l^p  30  3 

The  covenantee  must  not  pay  more  than  is  necessary  in  removing  the 
incumbrance.^"* 

SAME -COVENANTS  IN  LEASES. 

70.  When  any  of  the  foregoing  covenants  occur  in  leases, 
the  same  rules  generally  govern  the  damages  for 
their  breach,  as  -when  they  are  found  in  deeds.^^ 

Anciently,  the  rule  was  that,  where  the  lessor  was  sued  for  a  breach 
of  a  covoiwnt  to  give  possession,  the  lessee  could,  ordinarily,  recover 
only  nominal  damages  and  incidental  expenses,  but  nothing  for  the 
value  of  the  lease.  But  this  rule  was  inapplicable  where,  when  the 
lessor  covenanted  to  give  possession,  he  must  be  deemed  to  have 
known  that  he  had  no  authority  to  do  so,  and  the  lessor  would  then 
be  held  liable  for  the  loss  of  the  bargain;  and  the  damages  in  such 
cases  are  now  usually  measured  by  the  difference  between  the  reut 
reserved  and  the  actual  rental  value  of  the  premises  for  the  stipulated 
term.  And  other  damages  may  also  be  recovered,  provided  they  are 
proximate  and  certain,  and  were  fairly  within  the  contemplation  of 
the  parties  when  the  lease  was  made,  or  might  have  been  foreseen  as 
a  consequence  of  a  breach  of  its  j^-ovenants.^"' 

Tlie  other  covenants  usually  inserted  in  leases  are  mere  contracts, 

302  Delavcrgne  v.  Xonis,  7  Johns.  (X.  Y.)  .T.S;  Grant  v.  Tallniaii.  20  N.  Y. 
1!>1;  McrJuckin  v.  Milhank,  HI',  IIuii,  47.'{.  .31  N.  Y.  Supp.  1040.  affiiinod  ir)2 
X.  Y.  2!J7,  4<;  X.  E.  41)0;  Trescott  v.  Tnicniaii.  4  Mass.  (127;  Wiuslow  v.  Mc- 
Call,  .32  Bar)..  (X.  Y.i  211;    Hall  v.  Dean.  13  .Johns.  (N.  Y.)  10.".. 

^"•■' .Tohn.son  v.  Collins,  IIG  Mass.  392;  Grant  v.  Tallman,  20  N.  Y.  1!)1; 
I'.ailry  V.  Scott.  13  Wis.  618. 

■■<'*  liradshaw  v.  Crosby,  151  Mass.  237,  24  X.  E.  47;  Cobnrn  v.  Litchfiokl. 
132  Mass.  449.  For  broach  of  covenants  to  remove  incumbrances,  see  Somers 
V.  Wright.  115  Mass.  292. 

3  0  5  Dobbins  v.  Duqnid,  Cu  111.  4G4;  Sheets  v.  .Toyner,  11  Ind.  App.  20.'j,  38 
X.  E.  8.30;  Claris  v.  IMslier,  54  Kan.  403,  38  Pac.  493;  Wetzell  v.  llichcreek, 
r,:i  <Jliio  St.  02.  40  N.  E.  1004. 

308  Friedland  v.  Myers,  1.39  N.  Y.  43ti,  34  X.  E.  IO.m. 


DKAIII     IIY     WHONOKl'l.    ACT.  59 

foi'  tlic  luciicli   iif  wliicli   llic  [iiim'nilcs  nf  «|.mi:i^fs  li;i\f  uln'ad}'  hc<'i» 
discussed. '"'^ 

DAMAGES  FOR  DEATH  BY  WRONGFUL  ACT. 

71.  At   common   law   no  civil    action  could  be  maintained 
for   wrongfully    causing   the  death  of  a  human  be- 

The  common-law  rule  lias  boon  iiimiiiniously  ;i(ti-|iic(l  Itv  Ihf  coints 
of  the  various  states  and  of  the  United  States.^"" 

None  of  the  reasons  assigned  foi-  the  ndc  has  In-cn  pMi«nilly  a<-- 
cepted  as  siitisfactory,  and  it  n-sls  iijmiii  jidjudication.^'" 

But,  almost  universally,  direct  lej^ishiiion  h;is  iii;i(ii<  ally  aliro;.Mt.<I 
the  rule,  by  creatinf^-  a  new  cause  of  attiuii.  in  favor  of  s|H<ilii-<l  n-la 
fives  of  the  deceased  who  have  sutiVrcd  iiccniiiaiy  loss,  as  in  tin*  cas<* 
of  Lord  Campbell's  act,  passed  in  184(1.  and  similar  statutes  in  most 
of  the  states."^ 

Many  statutes  provide  that  the  amount  that  may  be  recovered  as 
damages  shall  not  exceed  a  certain  sum.  This  sum  is  liminnl  to  ?.'».(MK> 
in  Colorado,  Connecticut,  Illinois,  :Maine,  :Massi<hns.iis.  Minn.-sota. 
Missouri,  Nebraska.  Oregon.  Wiscoasin,  and  Wyoming:  to  .?7.(Mii»  in 
New  Hampshire;    to  $10,0U0  in  the  I>istrict   of  Columbia.  Indiana. 

307  See  Beach  v.  Crahi.  2  N.  Y.  SG:  Thonisoii-Hnustoti  Elt'ctric  Co.  v.  I>u- 
rant  Land  Imp.  Co..  144  N.  Y.  34.  39  N.  E.  7;  rnite<l  States  Trust  Co.  v. 
O'Brien,  143  N.  Y.  284,  38  N.  E.  20<V.  Gulliver  v.  Fowler.  *U  Conn.  ."><;.  W 
Atl.  852;  Trinity  Churcli  v.  Higgins.  48  X.  Y.  532:  Penley  v.  Watts.  7  M.e-. 
&  W.  GOl.  See,  also,  Dickinson  v.  Hnrt.  142  N.  Y.  is;'..  3f.  N.  E.  801:  Snow 
v.  Pulitzer,  142  N.  Y.  2(;:*>.  3<',  N.  E.  lo.V.e,  Kasiiuan  v.  City  of  Nrw  York.  l.VJ 
X.  Y.  4G8,  46  N.  E.  841. 

sosHiggins  v.  Butcher.  1  Yel.  SO:  Bak.r  v.  Hoifuii.  1  Cimp.  403;  Osbom 
V.  Gillett,  L.  R.  8  Exch.  88. 

309  Connecticut  Mut  Life  Ins.  Co.  v.  N.w  York  &  N.  II.  R.  Co..  25  Conn. 
2(;o;    Green  v.  Railroad  Co.,  28  Barb.  iN.  Y.)  '.>;    Insurance  Co.  r.  Brame.  U.> 

U.  S.  754. 

sioOsborn  v.  C.illett.  L.  R.  8  Exch.  88:  Hyatt  v.  Adams.  IG  Mich.  180: 
Green  v.  Railroad  Co.,  41  N.  Y.  294;    Pol.  Torts.  53. 

311  Tiff.  Death  Wrong.  Act.  p.  xvii.:  Seward  v.  The  Vera  Cruz.  10  App. 
Cas.  59;  Whitford  v.  Railroad  Co..  23  N.  Y.  4t;5:  Littlewoud  v.  Mayor,  etc., 
89  N.  Y.  24;   Hulbert  v.  City  of  Topeka,  34  Fed.  510. 


60  DAMAGES. 

Kansas,  Ohio,  Oklahoma,  Utah,  Virginia,  and  West  Virginia;  and  to 
120,000  in  Montana.  With  these  exceptions,  the  statutes  impose  no 
limit,  and  in  New  York  the  constitution  forbids  the  creation  of  any 
limit.^^- 

The  New  York  act  provides  that  the  amount  recovered  shall  draw 
interest  from  the  death,  which  interest  shall  be  added  to  the  verdict, 
and  inserted  in  the  entry  of  judgment.  This  provision  is  not  uncon- 
stitutional.^^^ 

Tlie  rate  of  interest  is  governed  by  the  statute  regulating  interest 
in  force  at  the  time  of  the  verdict.'^* 

The  interest  is  to  be  added  and  inserted  by  the  clerk.^^' 

Remission  of  Damages. 

^Vhere  the  verdict  is  excessive,  the  plaintiff  may  frequently  cure  the 
error  by  remitting  the  excess.  Where  an  item  of  damage  has  been 
erroneously  included  in  the  estimate  by  the  jury,  the  error  may  be 
cured  by  remitting  the  amount  allowed  for  such  item,  provided  it 
can  be  definitely  ascertained;  ^^®  otherwise,  not.^^^ 

In  the  case  of  nonpecuuiary  injuries,  where  the  verdict  of  the  jury 
is  final,  unless  it  shows  that  the  jury  were  influenced  by  partiality, 
prejudice,  or  passion,  the  plaintiff  has  been  permitted  to  remit  enough 
to  prevent  the  verdict  from  being  excessive.  It  is  a  common  practice 
for  both  trial  and  appellate  courts  to  indicate  the  amount  by  which 

312  Code  Civ.  Proc.  §  1904. 

313  Cornwall  v.  Mills.  44  N.  Y.  Super.  Ct.  4.5. 

314  Salter  v.  Railroad  Co.,  86  N.  Y.  401:  Id.,  23  Hun  (N.  Y.)  53.3.  overruling 
Erwin  v.  Steamboat  Co.,  23  Hun  (N.  Y.)  578. 

315  See  Manning  v.  Iron  Co.,  91  N.  Y.  665,  reversing  27  Hun  (N.  Y.)  219. 
As  to  the  measure  of  damages,  see.  also.  Blake  v.  Railway  Co.,  18  Q.  B.  93; 
Illinois  Cent.  R.  Co.  v.  Barron,  5  Wall.  95;  Oldfield  v.  Railroad  Co.,  14  N.  Y. 
310;  Murphy  v.  Railroad  Co.,  88  N.  Y.  445;  Tilley  v.  Railroad  Co.,  24  N.  Y. 
471,  29  N.  Y.  252;  Houghkirk  v.  Canal  Co.,  92  N.  Y.  219;  Pennsylvania  Co. 
V.  Lilly,  73  Ind.  252;  Illinois  Cent.  R.  Co.  v.  Weldon.  52  111.  290;  Chicago 
&  X.  W.  R.  Co.  v.  Whitton's  Adm'r,  13  Wall.  270;  Birkett  v.  Ice  Co.,  110  N. 
Y.  .504,  18  N.  E.  108;  Terry  v.  Jewett,  78  N.  Y.  338;  Ihl  v.  Railway  Co.,  47 
N.  Y.  317. 

316  Toledo,  W.  &  W.  Ry.  Co.  v.  Beals,  50  111.  150;  Evertsen  v.  Sawyer.  2 
Wend.  (N.  Y.)  507;  Lambert  v.  Craig,  12  Pick.  (Mass.)  199;  King  v.  Howard, 
1  Cush.  (Mass.)  137;   Kennon  v.  Gilmer,  131  U.  S.  22,  9  Sup.  Ct.  090. 

31T  Pavey  v.  Insurance  Co.,  56  Wis.  221,  13  N.  W.  925. 


DEATH    BY    WRONGFUL    ACT. 


61 


they  deem  the  verdict  excessive,  and  require  the  plaintiff  to  remit  it 
as  a  condition  of  refusing  a  new  trial. "«  ' 

It  is  a  grave  question  whether  this  practice  does  not  deprive  the 
parties  of  the  right  to  trial  by  jury,  and  it  would  seem  to  be  an  in- 
vasion of  the  province  of  the  jury;  3x.  but  the  practice  is  supported 
by  the  weight  of  authority.^^o 

^^«  Upham  V.  Dickinson.  50  111.  97;    Hegeman  y.  Railroad  Corp..   13  N    Y 

L   l^r  ^'  ''"''''''^'  ^  ^^"'"-  ^^-  ^-^  ^^'    Whitehead  v.  Kennedy,  69  n:  Y.' 
~iy>Z,  470. 

319  See  dissenting  opinions  in  Burdict  v.  Railway  Co.,  123  Mo.  221,  27  S.  W. 


453 


320  Baker  v.  City  of  Madison.  62  Wis.  137.  22  N.  W.  141,  583;  Town  of  Union 
V.  Durkes,  38  N.  J.  Law,  21;  Hopkins  v.  Orr,  124  U.  S.  510.-  8  Sup  Ct  590- 
Arkansas  Val.  Land  &  Cattle  Co.  v.  Mann.  130  U.  S.  69.  9  Sup    Ct   458 


WEST   PUBL18H.no   CO.,  PKINTEB8  AND  STEREOTYPEES,  ST.  PAUL.  MINN. 


/  /, 


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